It is 3.00am NY time Tuesday November 3 and the market is at 1.4760
The market has been in the 1.4770 -1.4810 range in Asian trading. I am waiting for the market to show whether it is still bullish , or as I believe, about to move into a bear territory under 1.4700. I am in no rush to get into a the market. Whichever way the market decides, we will have multiple opportunities to get aboard. I want to see a clear direction before I take the trade.
Edit 8.00am NY time Market is at 1.4655 The market has now convincingly broken the Daily Support line that started 8 months ago on March 3 at 1.2460 and was broken today at 1.4750. That is a very good indicator that the bull market is in the early days of becoming a bear market.
So lets go to the charts. I have my charts open to 300 periods of the Daily time frame.
The old Support line is found by linking up the lowest points on the Daily chart starting from 1.2460 (March 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 rising Support line is today at 1.4750.
As expected, that line has been convincingly broken today when the market dropped to 1.4626.
But the good thing is that the market will head back towards that Support-turned-Resistance line for a "confirmation" and we will be waiting for it. I want to make sure that I get it so I am placing my SELL order just below 1.4750 at 1.4725 and I will be using a 100 pip fixed Stop Loss on this trade because it is usually more volatile on the turns.
I have just placed a limit SELL at 1.4725 with a Stop Loss at 1.4825 (SMSes will be sent in the next 30 minutes...Just letting our Americans have their breakfast))
Assuming we get filled, I would be looking at an initial Target Price of 1.4600.
As stated yesterday, the market should head down to the next Support line at 1.4600
It may be the low point and bounce up OR continue down again.
But IF it continues down past 1.4600 there are NO other Support lines until approximately 1.2650 (Starting from 1.2331 ..Oct 26, 2008 and 1.2460… March 3 2009).
And the next significant 50% Fib is at 1.4400 (From 1.3747 ..June 15 and 1.5060 ..Oct 25)
That is a lot of dead airspace for a market to fall…. I am still hoping it does…
Emails
I will be slow answering emails this week. It is the end of the Quarter for the Fund and we are processing the accounts and the Clients Statements. Then we have the Auditors come and check everything before we can send out the Statements so I am busy with those matters this week. So if I am a little slow on the emails, just be patient. I will answer all of them.
MESSAGE FROM JACKO 478
It is 1.00am NY time Monday November 2 and the market is at 1.4771
NOTE: Daylight Saving Time (DST) ended in NY yesterday November 1 so you may need to adjust your times.
From tomorrow, I will be posting at the new times of:
3.00am NY time (which is 8.00am London opening time) and
8.00am NY time (which is NY opening time) and
12.10pm NY time (which is NY end of morning session)
7.00pm NY time (after the close of NY and which is 8.00am HK and 11.00am Sydney morning session)
The market has bounced up in the Asian session on the news of CIT's bankruptcy. The CIT Group is one of the largest US lenders to small and medium sized business $USD 71Billion in loans. This has caused international traders to pull out of US assets and caused the USD to drop again.
Looking past this news event, the market dropped back down to the Support line at 1.4700 at the end of trading on Friday. It broke through 1.4700 in early Asian trade and was as low as 1.4684 and heading downwards when the CIT news broke.
Also, the market attempted to break 1.4850 three times late last week (1.00pm OCT 29, and 10.00pm Oct 29 and 5.00am Oct 30) but was unsuccesssful.
We may be looking at a market top 0f 1.5062 (Oct 25) .
I would be very careful about the bull market at the present time. The move up today in Asian trading is being driven only by the CIT news. I think that there will be an attempt this week, to break the 1.4700 Support line and force a change of trend.
I think we may see a break of the 1.4700 Support line this week and head down to the next Support line at 1.4600 (Starting from 1.2460...March 3, and then 1.2886..April 21, and now at approximately 1.4600).
It may be the low point and bounce up OR continue down again. But IF it continues down past 1.4600 there are NO other Support lines until approximately 1.2650 (Starting from 1.2331 ..Oct 26, 2008 and 1.2460… March 3 2009).
And the next significant 50% Fib is at 1.4400 (From 1.3747 ..June 15 and 1.5060 ..Oct 25)
That is a lot of dead airspace for a market to fall…. I am hoping it does…
Edit 3.00am NY time Market is at 1.4750. The market has peaked at 1.4779 on the news of the CIT Group bankruptcy in the US. (Announced at 5.45pm NY time Sunday and 6.45am HK time when I was in the land of zzzz's)
As discussed above, I think this move is a reaction to that news and will have a limited life. At the present time the market is still bullish above the 1.4700 Support line. However, I am keenly hoping that we may see a break of that Support line this week for a change in trend. I don't intend doing anything until I see the temporary effect of this CIT bankruptcy being washed out of the market.
Edit 8.00am NY time Market is at 1.4775 The market has edged up in European trading to a high of 1.4796 so the resistance area of 1.4850 was not challenged. If the market does not break 1.4850 area, then it is continuing to look as though we are about to see a trend reversal this week. I would expect that as soon as the CIT bankruptcy is fully factored in by Wall St, we may see a move back down to 1.4700 and lower. However, until 1.4700 is convincingly broken it is still bullish. The market is too high to take a long trade and I don't intend to take a counter trend trade from these levels. I will take the less risky route and wait for the market to get back to 1.4700 Support level and make the trade decision there.
Edit 12.10pm NY time Market at 1.4822 Market has risen to as high as 1.4844 on the back of better than expected ISM Manufacturing PMIs and Pending Home Sales. The 1.4850 resistance area has not yet been broken
Edit 7.00pm NY time Market is at 1.4772. The market took a sizable reversal from exactly 12.00pm in NY earlier today. These changes in directions between sessions and between the US morning and afternoon sessions are becoming more distinct.
Market is in the slow Sydney/Tokyo zone and not doing much. Hong Kong kicks in now but the Asian session is not a active session for the Euro. This 7.00pm NY time post will be useful for a wrap up of the days afternoon session.
I am still waiting for the market to get back to the 1.4700 area so that I can make a trade decision there. I was asked why I didn't go long on Sunday night when the market first opened. The main reason was I was asleep...(It was only 6.45am HK time) ...and secondly, at that time, only the very thin Sydney market was properly open.
Emails
Email 1
I just got few quick questions:
1. What do you think about Pivot Levels? I've noticed they're notreally reliable but would like you to confirm that :) I don't use them...They are not statistically significant in their success rate. There are always so many of them and traders point to the ones that succeed but ignore all the pivot points that miss
2. I know we're in bull market now but I can't help looking foroccasions to short it Probably it's because price tends to go down much quickerthen go up. Is there a way to overcome that "bearish bias"? I am sometimes guilty of the same sin...because I know that the drops are so big and fast. But fighting against the trend slowly kills off your account in the long run.
3. Talking about S & R levels such as 1.5000 etc etc. I.5000 is a huge round number How far back doyou look to identify levels of support and resistance? Hmmm..you should only ever look at the chart for the time frame you are trading or a higher time frame
4. How often do you adjust your trendlines? For example: how do you treat that break of a trendline @ 1.4685? Do you just see it as"short spike" and ignore it or do you adjust your trendlineaccordingly? Trend lines are not an exact science..they will never line up perfectly. You just need to use commonsense and draw your lines touching the most bottoms with only one or two abberrant spikes at the most
5. Do you think we'll see 1.6000 in the near future? I don't know...I think we will see a break of the 1.4700 Support line very early next week and head down to the next Support line at 1.4600 (Starting at 1.2460...March 3 and then 1.2886..April 21). It may be the low point and bounce up OR continue down again. But IF it continues down past 1.4600 there are no other Support lines until 1.2650 (from Support line 1.2331 ..Oct 26, 2008 and 1.2460… March 3 2009). That is a lot of dead airspace for a market to fall…. I am hoping it does…LOL
7. What was your worst losing streak since you developed your systemfew years ago? Jan -Feb this year.... But it was in the middle of the greatest Financial Crisis in 80 years and the biggest increase in trading volatility in history, so I don't feel too bad. And I was still lucky enough to end up in profit that Quarter
Email 2
Do you have a word or two that you can share with me, what it all take to be a full time trader? Do we need a huge capital for that and trading a certain amount of lot size so to cover all the living cost ? Not really, the leverage in this business is second to none...How easy is it for you to go the Bank and get $500,000 for a business??? Very hard I would say. Yet to get USD $500,000 of trade capital is easy. Walk into a broker and put down a small deposit and you have $500,000 to work with. Then it is just up to you to work that money and make a profit
Email 3
The current trend line you are using is obviously being respected, at least for now. Yes
And I know that you have said a trendline that incorporates as many points as possible is the best way to make a trend line. Yes
Do you think a trendline drawn connecting the 2 early trend lows at 1.2456 on 3/4/09 and 1.2885 on 4/22/09 will be considered another strong possibility of support??? Yes, it is the next level Support line. If the current line is broken (which I think will happen very early next week), then we re-set our 50% fib line and the Support line
Support on that trend line currently would be at 1.4600. Yes
It would also be the same if I drew a trendline on my weekly chart. yes
The reason I ask is that you said you would consider selling at 1.4650, I was thinking that a rebound from the 1.4600 area was a strong possibility and that 1.4550 would be the safer short ?? Possibly, but once the Daily Support line is convincingly broken the rule is to go short (preferably on a confirmation retrace back to the broken Support line turned Resistance line)
As always thanks for your time and efforts,here is a little update on my progress. I am getting better and better at trading THANKS TO YOU. It has taken much longer and been more expensive than I ever anticipated but I feel more in tune with the market than ever and that I will be able to fullfill my dream to trade for a living. Excellent
I have identified my problems (money management was the biggest and patience was a close second) and am moving forward. Thanks again. Good work...You have identified the two issues you need to fix. Now you just need to fix them
Email 4
I've got to trouble you with one more question: how on earth did you know to exit this trade when you did? I was concerned when it failed to break that 1.4850 area for the third time, so I decided to get out
Within 5 minute of your text price dropped 30+ pips. The market often moves 30+ pips...it was just coincidence that it happened after I had closed my trades, drafted the SMSes and then sent the SMSes.
I almost thought it was your selling that moved the market... LOL...No I was out before it crumbled
Email 4
I just want to learn more clearly what your take profit exit was. I should have exited at the 1.4850 resistance area, but got a little greedy hoping that it would break it and go up ...It didn't, so I gave back 17 pips by having to get out at 1.4833.
Email 5
It seems that the market behavior now compared to a few months ago is a hell lot of difference.It behaves so differently.(I was not trading pre-Great Financial Crisis time.) The financial crisis was the worst economic situation for 80+ years . It was soooo close to being a repeat of the awful Great Depression..so the markets were in huge turmoil for the last 12 months.
This leads to me to think that now that the GFC is over, we are back to the days where our trendy EurUsd is back and we can see you trading your old self with your old friend. Yes, I am feeling HUGELY optimistic about my trading for the next 12 months
Email 6
How did you know that the 50% would not act as support and enter the trade then? It was dropping too hard and fast. Also, the Fib does not have the % success in turning a move around as much as a Support or Resistance line.
You knew it would hit the support line and waited for it to do so, can you let me know how you knew to wait? The 50% fib line weakened it and slowed it...the Support line was able to turn it.
Email 7
I have to a ask a stupid question. They tell me stupid questions are the best questions... LOL LOL LOL LOL
Exactly when does a daily bar begin/end? Yes, it depends on how you set your charts...I always set my charts (and my computers) to NY time
Is it exactly the same all over the world, like 0:00 UTC or something? No it usually depends on where your broker is situated...but they all have the ability to re-set the charts to your own time...I just prefer NY time (which is exactly 12 hours behind HK anyway)
Or is there a difference in how brokers define a day? No they all define a day as 24 hours...LOL..LOL
Thursday, October 1, 2009
MESSAGES FROM JACKO (October 2009)
MESSAGE FROM JACKO 477It is 1.00am NY time Friday October 30 and the market is at 1.4848
My buy trade at 1.4695 is doing well. My Stop Loss is at 1.4800. The market has risen to the previous mild resistance area of 1.4850.
I have locked in a minimum 105 pips profit, and there may be more to come with this up move. However, I will be closing this trade today because I do not wish to hold the trade over the weekend. I am continuing to let it play itself out for a little while longer.
Edit 4.00am NY time Market is at 1.4825 I am continuing to let this trade play itself out. The previous resistance area of 1.4850 has stood tougher than I expected. The positive for us is that if or when it breaks, it will move up quite quickly and quite hard. The negative is, that the market might not get back up there today and may hit our SL at 1.4800. I am an optimist, so I have high hope for the positive. Those of you who are less optimistic should take profits now.
Edit 7.15am NY time Market is at 1.4834 This market is struggling to break 1.4850. I intend to close my 1.4695 trade soon at the 1.4825 or higher. A 130+ pip profit
Edit 7.21 am NY time Market is at 1.4835 I have just closed my buys at 1.4833 for a 138 pip profit
Edit 7.40am NY time Market is at 1.4811 The market crumbled after I typed the SMS and as the SMSes were being sent. I apologise for the short notice but I wasn't expecting it to drop as they were being sent.
Edit 8.30am NY time Market is at 1.4810 Looking back and reviewing the trade, the entry was good but I could have improved the exit by exiting at the 1.4850 area of Resistance on either of the three periods when it was in that area.
If I had done so, I could then have re-entered the market when it dropped back down and then ridden it back up again to the 1.4850 area. I used that strategy early in my trading. (It was buying back at a discount. And it allowed extra pips to be accumulated.) I intend to use it again next time.
Edit 12.10pm NY time Market is at 1.4770 The market has dropped down to the Daily Support line again at 1.4720 and has bounced upwards again. But this is starting to look suspiciously as though the market is now attempting to break the Daily Support line.
Emails
Email 1
Just wondering how you define the end of a trend? A convincing break of the Support line in the relevant trading time frame. In this case it would have been the break of the Daily Support line. Definition of a convincing break= On the daily I would allow up to a 50 pips move below the Support line as just Stop hunting. More than that and the Support line is convincingly broken
If the daily TL is broken at 1.4700 and price continues to 1.4474 (the most recent daily low), would you consider short trades once again? I would have considered the trend as broken (and would have gone short) at 1.4650 or less.
How do you trade the end of trends? Trade shorter TFs? No, go with the new trend
Email 2
I'm seeing the 3rd plateau of a stepping-down pattern on this retracement and feel that if it goes into 4600 territory, there might be something larger at work, i.e. a possible trend reversal. If it breaks 1.4700 by a minimum of 50 pips I would agree with you. But I also think that there was Stop Loss hunting for about 20 pips
I'm looking to buy at around 4700, provided that I see the market strengthening .I would think that as long as I can get in at below 4750, things would be good. Excellent strategy and decision
What do you think about that? I bought at 1.4695.after I saw all the Stop losses taken out and then the market started moving back up.
Email 3
Just wondering if you could add to your analysis and train of thought for finding an entry point for a buy. You mention wanting to wait and see, take your time this time and make sure it's really going to shift. None of us want to catch a falling knife, that's certain. So, what exactly are you looking for? I wanted to watch to see if it was going to break through 1.4700 and if so, by how much. Less than 20 pips means it is just Stop Loss hunting at the Daily Support line. (That is quite a strong line so the Stop Losses would be queueing up) More than 50 pips below the Support line means that the trend was broken . BUT it took out the SL's then started moving back up (more buyers than sellers)...so I jumped in at just under 1.4700 for a bargain
Is it because it's the afternoon of the New York session? Does the coming Asian session have any bearing for you? The change of sessions is always in the back of my mind for a change in direction, especially if there has been an extreme move in the earlier session
Email 4
1. Do you have a profit target in mind as you place the trade? For example, the current trade from 1.4700 level - where do you expect it to go, and what is your thinking behind that? My first target was 1.4850..Usually I would have closed at that resistance area and bought back in again lower, but I was enjoying the easier trade of changing back to the Daily, so I let it go..I was confident that it would keep going anyway...where is the target??? Possibly 1.5000, but I will be closing it today anyway...I don't want to be in the trade over the weekend
2. Would you suggest a specific level for SL, rather than 50 pips from entry? Example: I got in a bit earlier than you at 1.4720, the price had already bounced off 1.4703 at that time. At a later time there was a better entry near 1.4690 which you got. 50 pips from my entry and 50 pips from your entry are different - what is your thinking on this? 50 pips from YOUR entry otherwise, your SL will be bigger (or smaller) than mine
Email 5
Sometimes you say: that "We compound up our trades" What does it mean please?You have two ways of compounding...
First is to add trades as your first trade goes into big profits (sometimes called "pyramiding") OR
Secondly, when you have closed a trade for a profit, using the profits to increase the number of lots traded on the next trade
Email 6
I would like to know if you ever add to a winning position. I used to do it before the start of the blog. I was waiting for the blog traders to get sizable profits before I started adding to positions. We were just getting to that point, and then the Financial Crisis started and I did not proceed with compounding or pyramiding because the increased volatility made it too risky
And ifyou do, how and when is the good time to do it? 100 pips in profit
And what is the goodsize to add to a winning position? 25-50% of the original trade
Email 7
I haven't seen you adding to the positions during the trades mentioned in your blog entries. I had not started compounding the groups returns before the GFC because we were still just using a flat investment while we built the initial capital up. The goal was once we got to 50% return on our original capital, we would then use the 50% profits to start compounding...Then the GFC arrived
MESSAGE FROM JACKO 476
It is 1.00am NY time Thursday October 29 and the market is at 1.4722
I am letting my BUY trade at 1.4695 play itself out. My Stop Loss is a fixed 50 pip Stop Loss at 1.4645. I am now back to my preferred trading style. The volatility of the last 12 months (due to the Financial Crisis) has mostly settled down, so I also decided to revert to only a 50 pip Stop Loss.
The market has been moving in my preferred UP direction since the trade was opened but it has not been a major movement. I will be looking to move the SL to Break Even reasonably quickly.
And whatever happens with this trade and however it ends up, the way the trade was executed was far more pleasant than I have traded in the last 12 months. The longer lead times and the longer decision processing time made the trade so much easier to transact.
Edit 1.20am NY time Market is at 1.4728 I have just moved my Stop Loss to Break Even. We now have a free trade
Edit 4.00am NY time Market is at 1.4735. The market had a quick drop back down as low as 1.4701 to shake out the weaker longs in the market but our Stop Loss at Break Even (1.4695) was safely tucked under the Round number. The market has turned back up again and is making new highs for the day.
Edit 8.00am NY time Market is at 1.4730 The market has moved as high as 1.4762 but has come back some. I am letting the trade play itself out for a while longer. Our Stop Loss remains at Break Even for the present time.
(Note: Mrs Jackson and I are heading out to a Dinner function so the usual 12.10pm Edit may be a little later. I will answer all emails tomorrow)
Edit 12.50pm NY time Market is at 1.4848 My buy trade at 1.4695 is doing well. I am now moving my Stop Loss to 1.4800.
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