It is 3.00am NY time Wednesday February 24 and the market is at 1.3524
As stated yesterday, I underestimated the strength of the 1.3700 Resistance area and was half-expecting a break through it. But the market has stabilized at the low 1.3500's and has started to move back up in the Asian session, though pre London trading is looking weak.
We are still in a long term down trend (which I expect to hit 1.1000 by the end of this year). But I also believe that we will have a short term retracement to the 1.4000 area which is back up to the Daily Resistance line and the 50% fib point.
I am prepared to wait for the correction to 1.4000 to complete and then get in aggressively on the trend for the next leg down.
Edit 8.00am NY time Market is at 1.3550 The market has moved up marginally but has stayed within a narrow range Mr Bernanke's testimony and the US New Home Sales numbers will cause volatility at 10.00am today. Also Mr Geithner speaks at the same time and his extraordinary ability to put his foot in his mouth always offers potential for market movement.
MESSAGE FROM JACKO 546
It is 3.00am NY time Tuesday February 23 and the market is at 1.3670
The retracement move back up to the Daily Resistance line (and 50% fib) seems to be picking up momentum as more and more of the recent record number of Sellers look to get out and close their positions.
The move up may find some resistance at just under the 1.3700 area ( the more aggressive, shorter term Resistance line from 1.4579 (Jan 13) and 1.3788 (Feb 16) which is currently at around 1.3680). But if it breaks through that resistance we should see my target area of around 1.4000 come into focus reasonably quickly.
Edit 8.00am NY time Market is at 1.3578 The market peaked at 1.3692 after hitting the Resistance at just under 1.3700. But it then failed to break through and has fallen back.
I expect that it will mount another attack on the 1.3700 Resistance area very soon.
Edit 12.10pm NY time Market is at 1.3518 The market is continuing to fall back after its failure to break through the 1.3700 Resistance area.
Edit 7.00pm NY time Market is at 1.3521 The market has stabilized at the low 1.3500's. I underestimated the strength of the 1.3700 Resistance area...
The adventurous traders may wish to again take BUY positions from any quick pullbacks to the 1.3550 (or lower) levels as the market continues to correct upwards.
I am prepared to wait for the correction to complete and then get in aggressively on the trend for the next leg down.
Emails
I am slowly slogging through the emails. Please be patient. I will get on top of them all very soon.
MESSAGE FROM JACKO 545
It is 3.00am NY time Monday February 22 and the market is at 1.3627
As discussed on Friday, it is possible that the initial major drop is over and the long-awaited retracement has just commenced on the Daily charts. There was an extreme and a record number of net short positions late last week. As the market moves back up in the next couple of days, more and more of the recent Sellers will be looking to get out and close their positions.
I have my charts open to 300 periods of the Daily time frame.
The Resistance line is found by linking up the highest points on the daily chart starting from 1.5140 (Dec 2) and 1.4579 (Jan 12) , with the resistance line today at approx 1.4000.
However, I am also looking at the more aggressive, shorter term Resistance line from 1.4579 (Jan 13) and 1.3788 (Feb 16) which is currently at around 1.3700.
The Support line is of no real value at the present time since there is no upward sloping Support lines of value in any proximity.
The 50% fib lineThe more relevant 50% fib line is the target retracement number of 1.4000 which is the 50% fib from 1.4580 (Jan 12) to 1.3444 (Feb 17)
I am prepared to wait for the correction up to near 1.4000....the Resistance line, the 50% fib from 1.4580 (Jan 12) to 1.3444 (Feb 17), and the round number .... and then get in aggressively on the trend for the next leg down.
Edit 8.00am NY time Market is at 1.3610 The market has done little in the London session. There is no news of any importance today so we will see the full impact of US trading sentiment today.
The adventurous traders did well late last week. The adventurous traders may wish to again take BUY positions from these current levels as the market corrects upwards.
I am prepared to wait for the correction and then get in aggressively on the trend for the next leg down.
Edit 12.05pm NY time Market is at 1.3590 A slow US session so far.
Edit 7.00pm NY time Market is at 1.3600 The lack of any news events in US session lead to a quiet and lackluster session
Emails
I have started answering the backlog of emails again today. We are starting to get back to normal around here after a turbulent and traumatic three weeks, which was compounded by the Chinese New Year holiday for my staff last week. I sincerely apologize for the disruption. As stated in Message 540, all memberships will be extended by two months as compensation.
On a personal note, One of the benefits of the blog is the historical trading diary that it generates for me and you.
The big disadvantage is that it dramatically opens up my private life and personal actions because I feel obliged to give you the reasons and justifications for any times that I am not available.
MESSAGE FROM JACKO 544
It is 3.00am NY time Friday February 19 and the market is at 1.3480
I am starting to despair that this market will never retrace again... but then commonsense prevails.
The market has been badly battered by a combination of the Greek debacle, the possibility of an early Fed hike in interest rates and China's efforts to slow its economy. But the market never travels in one direction forever. There are always pullbacks and I am now just waiting for the next pullback. Having said that, I am surprised at the depth that it has dropped on this leg down.
I am prepared to wait for the correction and then get in aggressively on the trend for the next leg down.
Edit 8.00am NY time Market is at 1.3521 Looking at the charts, we can see that the spike down caused by the FOMC statement yesterday afternoon may have been the exhaustion spike for this market drop. I am hoping that the initial major drop is over and the long-awaited retracement has just commenced.
The adventurous traders may wish to take BUY positions from these current levels.
I am prepared to wait for the correction and then get in aggressively on the trend for the next leg down.
Edit 12.10pm NY time Market is at 1.3555. The market has started its retracement back up. There are a record number of net short positions (see yesterdays Message). As the market moves back up, more and more of the shorts will be looking to close their positions. So I expect the retracement to be quick.
The adventurous traders may wish to take BUY positions from these current levels. (The retracement will go higher)
I am prepared to wait for the correction and then get in aggressively on the trend for the next leg down.
Emails
Am taking sometime today to spend with Mrs Jackson. In my efforts to catch up on two weeks admin work that accumulated while we were in the States, I have neglected her badly. Will look after any outstanding emails on Monday.
MESSAGE FROM JACKO 543
It is 3.00am NY time Thursday February 18 and the market is at 1.3547
I have just opened the platforms. The market is getting very oversold in the short term.
As discussed yesterday, I rarely use the CFTC Commitment of Traders (COT) data, but it is showing that there is an extreme and record level of net short positions in the Euro against the US dollar, leaving relatively little room for further selling. (Unfortunately the DailyFX.com article, "US Dollar to Decline on Extreme Forex Positioning," was taken down during the Asian session).
I would be very careful of opening any SELL positions at these low 1.3500 levels.
I am prepared to wait for the correction and then get in on the trend
The US Producer Price Index (PPI) and US Unemployment Claims are the news items at 8.30am with a follow up Philadelphia Fed Manufacturing Index at 10.00am followed by FOMC Statement at 4.30pm.
Edit 8.00am NY time Market is at 1.3580 The market has been pulled up off its lows in London trading. The reaction to the US news items will give us a better indication. Its too low for me.
Edit 12.10pm NY time Market is at 1.3568 The market has had a quick run up to 1.3653 on the news but has not been able to overcome the power of the down trend. The market has been pushed back down again.
Edit 7.00pm NY time Market is at 1.3455 This market was seriously dropped on the FOMC Statement. ...Is this thing ever going to retrace???... I am not being suckered into selling at this low a level.
MESSAGE FROM JACKO 542
It is 3.00am NY time Wednesday February 17 and the market is at 1.3776
The market has done very little in Asian trading. Most Asian countries are celebrating Chinese New Year. (Australia and New Zealand are the exceptions). Here in Hong Kong there are "Lion Dances" everywhere, accompanied by loud banging of drums and cymbals (to ward off bad luck). All very exciting, especially for the children.
I was mildly tempted to take a counter trend trade yesterday on the break of the more aggressive, shorter term Resistance line from 1.4579 (Jan 13) and 1.4026 (Feb 3) and 1.3839 (Feb 9) and 1.3801 (Feb 10) which was at around 1.3700. However, the ghost of the last counter trend trade still haunts me so I have decided to wait for the market to move higher up and take the trend trade instead.
I know that some of the more adventurous traders took me at my word that the 1.3700 Resistance area was "not very strong" and placed some very short term buy trades on the break of 1.3700 and have grabbed some quick pips.
I intend sticking to the trend trades and using the compounding (and I don't care how long I have to wait to get the right trade). If you look at the Weekly or Monthly charts you can easily see that the market has become much more "erratic" in the last 18 months as a result of the GFC and my counter trades were simply not getting a good enough success rate. Also, the countertrend trades had the effect of "getting in the way" of placing the more profitable trend trades. (Mrs Jackson is still teasing me about that missed 900 pips ... because I was trying to be too smart and play both sides of the market, and trying to be a fast-trade trader... Just trade the trend and compound up the profits by adding trades.)
I have also had some emails about my statement that "1.000 will be hit before we see a break of the 1.6000 again". I am a strong USD bull. I think the EU has BIG problems.
I am prepared to go on record that I believe that we will see the EUR/USD at 1.1000 by the end of this year.
Edit 8.00am NY time Market is at 1.3733 Lots of news coming out from US this morning but the key one is the US Building Permits number at 8.30am and then at 2.00pm this afternoon the FOMC Meeting minutes will be released. Both are market moving announcements.
The market has broken through the 1.3700 Resistance area (which was not a strong Resistance), then risen as high as 1.3785 and has now dropped back.
NOTE: It is still above the shorter term Resistance line from 1.4579 (Jan 13) and 1.4026 (Feb 3) and 1.3839 (Feb 9) and 1.3801 (Feb 10) which was at around 1.3700.
It remains to be seen if this drop back is a "confirmation" touch of the Resistance line before it continues upwards OR it is a resumption of the downtrend.
I am hoping that it will track upwards closer to my 1.4000-1.4100 SELL target area.
Edit 12.05pm NY time Market is at 1.3630 After bouncing around the 1.3700 mark for over an hour, the breakdown of 1.3700 was quick. A sizable retracement will occur soon on the Daily chart.
Edit 7.00pm NY time Market is at 1.3604 The market is getting veryoversold in the short term.
I rarely use the CFTC Commitment of Traders (COT) data, but it is showing that there is an extreme and record level of net short positions in the Euro against the US dollar, leaving relatively little room for further selling. (See DailyFX.com "US Dollar to Decline on Extreme Forex Positioning").
I would be very careful of opening any SELL positions at these levels.
I am prepared to wait for the correction and then get in on the trend
Emails
I have been quickly working through the backlog of Fund administration paperwork and emails from the last two weeks very quickly now. (I am the only one in the office because everyone else is on vacation and celebrating the Chinese New Year festivities). I expect that I will have caught up completely within the next 24 hours. So if I haven't answered your email, please be patient, I will get to it very soon. (It is amazing how fast you can get through work when there are no distractions!!)
MESSAGE FROM JACKO 541
It is 3.00am NY time Tuesday February 16 and the market is 1.3654
I want to thank each of you for bearing with my absence over the last 12 days. It has been a very difficult time for me and Mrs Jackson.
The market yesterday was quiet due to the combination of the Chinese New Year holiday in Asia and the Presidents Day holiday in the US.
I have my charts open to 300 periods of the Daily time frame.
The Resistance line is found by linking up the highest points on the daily chart starting from 1.5140 (Dec 2) and 1.4579 (Jan 12) , with the resistance line today at approx 1.4100.
However, I am also looking at the more aggressive, shorter term Resistance line from 1.4579 (Jan 13) and 1.4026 (Feb 3) and 1.3839 (Feb 9) and 1.3801 (Feb 10) which is currently at around 1.3700.
The Support line is of no real value at the present time since there is no upward sloping Support lines of value in any proximity.
The 50% fib line The market has now been as low as 1.3531 on Feb 12 which is below the extreme 50% fib line from 1.2331 (Oct 26, 2008) to 1.5144 (Nov 24, 2009) at 1.3737.
I am watching to see the reaction of the market to the shorter term Resistance line at 1.3700 outlined above.
My strategy for 2010 is to keep longer trades and will be looking to add to the positions to compound up some profits. We may have missed some of the initial move down when I fluffed that excellent 900 pip trading opportunity midway through January but the next retracement will take it back up to a high level (1.4100??) before sending it down much further.
My strategy is to snare a some trades at a good Resistance /congestion area and then let the market downtrend look after the rest.
I am also keen to get back into compounding my trades. (Adding to open trade positions)
As stated in Message 537, I think that 1.3000 will be easily reached. I think that 1.2500 is highly possible. And I think that 1.000 will be hit before we see a break of the 1.6000 again. I am a strong USD bull.
Edit 8.00am NY time Market is at 1.3636 The market has moved close to the 1.3700 Resistance area at 1.3682 and then moved away slowly. The 1.3700 Resistance area is not very strong but appears to be holding for the present time.
Edit 12.10pm NY time Market is at 1.3765 The market has broken through the 1.3700 Resistance on the news that Greece is ahead of its Deficit- reduction targets and will not require any bail out from the European Union according to the Greek Finance Minister. (Yeah...Right !!!!... Does anyone believe a politician who says that his government has turned it around that quickly?? ). This is a short term technical correction back up to maybe 1.4100, before the resumption of the down trend
In the longer term, the Euro is going down to 1.000.
Edit 7.00pm NY time Market is at 1.3763. The market has broken through 1.3700 Resistance on its way to a correction target between 1.4000 and 1.4100 which is the 50% retracement between the shorter term move from 1.4578 (on Jan 13) and 1.3531 (on Feb 12).
Emails
I am slowly getting over the different time zone shift from our trip to the States and back. I am currently working through a backlog of Fund admininistration paperwork and will answer all emails as soon as possible.
MESSAGE FROM JACKO 541
It is 5.45am NY time Monday February 15 and the market is 1.3627
I have just returned from a most stressful week in very difficult weather conditions (The US has been having widespread snow storms all week).
We have just had a gruelling 16 hour direct flight home with two screaming young children in the row behind us that made our flight an absolute horror!!.
I am going to have a sleep and will be back for the London session tomorrow.
MESSAGE FROM JACKO 540
I have just received some very bad news. I am flying back to the United States as soon as possible today. I expect to be unavailable until February 14/15.
Please do NOT send any emails during that time. I will not be reading anything until I return.
Wednesday, February 24, 2010
Friday, February 5, 2010
MESSAGE FROM JACKO 539
It is 3.00am NY time Wednesday February 3 and the market is 1.3978
My counter-trend BUY trade at 1.3925 is progressing well. (currently 50+ pips in profit).
I am continuing to let the trade play itself out. I have just moved my Stop Loss to Break Even (1.3925).
I am also interested in adding another trade to the current trade at 1.4025. (That is, 100 pips above the first trade and just above the 1.4000 round number Resistance barrier)
The Stop Loss for both trades will 1.3925. (That is, the first trade's Stop Loss is at Break Even and the second trade has a maximum possible loss of 100 pips).
Edit 3.15am NY time Market is at 1.3975. I have just placed an order to BUY at 1.4025 ( I want the market to break above 1.4000 before I get set...). It has a fixed 100 pip Stop Loss
Edit 8.00am NY time Market is at 1.3994 . Our BUY at 1.4025 orders were filled when the market reached a high of the 1.4025. (I set that price hoping to avoid the extremes of the 1.4000 stop hunts and market movements but got caught at the very extreme edge...Hmmmm). I am now letting the trades play themselves out.
We have the ADP Non Farm Payroll numbers coming out at 8.15am NY time and the ISM Non Manufacturing PMI numbers coming out at 10.00am NY time.
Edit 8.30am NY time Market is at 1.3963. The ADP NFP came in better than expected and has strengthened the USD (causing the Eur to fall). Still letting the trades play themselves out. We may have seen most of the reaction to the ADP NFP news.
Edit 12.05pm NY time Market is at 1.3908 The market has reversed on the better than expected ADP NFP numbers closing out both our trades. The initial trade was closed out at Break Even, but the second trade was closed for a full 100 pip loss. A disappointing outcome for these two trades.
Edit 7.00pm NY time Market is at 1.3897 It was a disappointing outcome for the last trade. However as I sit here and review the trade in the cold light of morning, given the same set of circumstances (and not knowing the outcome), I would still have taken the trades. The hitting of the second trade at the absolute high was "unfortunate" (that's an understatement!!!). But I am, after all, a trader. And as a trader, I saw what I considered was a potentially good opportunity of two long trades pushing up to the Daily Resistance line. So, I accept that I was wrong and move on to the next trade.
MESSAGE FROM JACKO 538
It is 2.40am NY time Tuesday February 2 and the market is 1.3940
As I said yesterday, I want to turn up the trading and generate some exceptional numbers for the 2010 year.
I believe that this market WILL retrace some of this latest move down. I am seeing evidence of a turn in the market in the last day or two after the market reached its low of 1.3852 on Sunday evening NY time. .
I am now seeing the short term resistance line at 1.3950 as a line that will soon be broken. The market usually moves away from a Resistance line quickly, but the market is hanging around this line. That usually indicates a break of the line is about to happen
The market will instead try to move up to the longer term Daily Resistance line at 1.4200. (We may see some short term resistance at the 1.4000 round number area).
I am taking a counter trend trade at 1.3950 (or lower) with a 100 pips fixed Stop Loss (which would be at 1.3850 or lower...which is below the low set earlier this week).
This is a RISKIER trade than normal so if you are more risk averse at the time, then do NOT take this trade. Wait until the market gets up to the Daily Resistance line at 1.4200 and then Sell into the trend.
But I am much more confident in my trading at the moment and feel keen to play both sides of the market.
Edit 2.55am NY time Market at 1.3942 I would like to buy these at 1.3900... but I am not sure it will get that low....
Edit 3.20am NY time I have just bought at 1.3925. My Stop Loss is at 1.3825
Edit8.00am NY time Market is at 1.3938. I am letting my trade play itself out. My Stop Loss is at 1.3825 and my initial target is 1.4200.
Edit 12.05pm NY time Market is at 1.3955 I am now just letting the trade play itself out.
Edit 6.30pm NY time Market is at 1.3969 ( NOTE :This edit is earlier than my normal 7.00pm Edit because I have an appointment this morning here in Hong Kong)
I am continuing to let the trade play itself out. I am looking at moving my Stop Loss to Break Even sometime soon. But I am not in a rush to do so. I am more interested in getting to a position (around 1.4025) where I can add another trade to the current trade and move the Stop Loss for both trades to 1.3925. That way the first trade is at Break Even and the second trade has a maximum loss of 100 pips.
(These are just my thoughts at the present time.)
MESSAGE FROM JACKO 537
It is 3.00am NY time Monday February 1 and the market is 1.3880
January 31 saw the end of another Quarter. We are currently having our accounts prepared and audited in the next two days. Again we have closed another Quarter in profit.
We are proud of the fact that we have never had a losing Quarter. However, much more importantly this year, I want to turn up the trading and generate some exceptional numbers for the 2010 year.
After a very ordinary November and December caused by the market topping/turning and by the lead up to Christmas when I was feeling really fatigued from the market , January saw a small 140 pip profit for the month.
However that was overshadowed by the excellent trading opportunity that I fluffed midway through the month when I closed out two Sells trades early at 1.4495 and 1.4425 due to my excessive caution (the final residual effect of the GFC). (see Message 529).
At the Round number market price (approx 1.4000), I would have been over over 900 pips ( 495 pips and 425pips respectively) better off between the 2 sets of positions if I had not closed them. Thats 900+ pips in less than 10 days. So you can see how easily it is to accumulate large numbers of pips on the longer time frames. Furthermore, the market then extended that move......
Having said all that, my confidence has surged this month since the beginning of this 2010 year. The break over Christmas and the New Year was a major turning point for me. (I needed a break after the last 18 months of the effects of the GFC)
The market is again feeling very familiar to me. The uncertainty of the GFC is gone and I am becoming much, much more confident that my trading decisions in the next 12 months will be profitable for the Fund, the trading group and myself.
As I said in Message 521, I am very optimistic about 2010. My strategy for 2010 is to keep longer trades and will be looking to add to the positions to compound up some profits. This was my strategy in 2006 and 2007 which resulted in some spectacular profits.
My strategy is to snare a some trades at a good Resistance /congestion area and then let the market downtrend look after the rest.
I am also keen to get back into compounding my trades. (Adding to open trade positions) It has been difficult (and would have been financially irresponsible) to use the compounding strategy in the last 18 months because of the extreme volatility caused by the GFC and its after-effects.
However, 2010 is looking like a completely different animal compared to the GFC horror year of 2009. The market is feeling very similar to the 2006 year when the trend changed and I had an exceptionally good year.
We are still in the very early stages of the change in trend. The big issue to remember is that, (as sure as day follows night), this market WILL retrace some of this latest move down, giving us the opportunity to jump back in at a higher price and ride the trend back down. This down trend has a LOT further to go......!!!!! I think that 1.3000 will be easily reached. I think that 1.2500 is highly possible. And I think that 1.000 will be hit before we see a break of the 1.6000 again. I am a strong USD bull.
TODAYS TRADING
I have my charts open to 300 periods of the Daily time frame.
The Resistance line. is found by linking up the highest points on the daily chart starting from 1.5140 (Dec 2) and 1.4579 (Jan 12) , with the resistance line today at 1.4200.
However, I am actively looking at the more aggressive, shorter term Resistance line from 1.4555 (Jan 13) and 1.4411 (Jan 19) and 1.4178 (Jan 25) which is currently at around 1.3950.
The Support line is of no real value at the present time since there is no upward sloping Support lines of value in any proximity.
I am waiting for a sizeable retracement The aggressive target sell price of 1.3950 is less than 100 pips pips away. So I may sit on my hands for a while.
I am not tempted to place a countertrend Buy trade. And the market is too low for me to be a seller at these levels. However I may look at some more aggressive selling strategies with smaller Stop Losses for this week.
Edit 8.00am NY time Market is at 1.3914 I will be watching the price action at around the 1.3950 area. It is not a very long term resistance line (only starting on Jan 13) but I will be watching it. The market has not have any strong direction in the London session today.
Edit 12.05pm NY time Market is at 1.3905 The market is still too low for me to be a seller at the current levels.The market has only reached a high of 1.3934, which was too low even for an aggressive Sell trade. I am on the sidelines for the present time.
Edit 7.00pm NY time Market is at 1.3922 The market is still too low for me to be a seller at the current levels.The market has only reached a high of 1.39348, which was too low even for an aggressive Sell trade. I am on the sidelines for the present time...but could change at any time
PS Tomorrows Message will not be a "wordy" as todays... I must have had verbal overflow
Once you miss that small window opportunity to get set at the break of the trend line, you then start to become more cautious not to get hit by a retracement. The market usually moves very quickly on the break of a daily trend line.... So then you miss some more of the move.
You then have three choices...
I am slowly becoming more brave now that the GFC is over, but I can tell you now that I have had some seriously sleepless nights in the last 18 months worrying about how to manage that huge 400% increase in volatility that had the potential to knock out 100 pip Stop Losses with ease.
I was also concerned how MY trading decisions were impacting both the investors in the Fund and the trading group. My biggest fear is that I may cause the investors in the Fund and the traders in the trading group to lose money. Fortunately, the Fund has been performing very well, but we were never 100% sure that I could continue to make profits Quarter after Quarter like we have done.
I always have known that my trading results in 2006-2008 were way above average, but I was truly scared that the GFC had the potential to cause damage to my trading, especially when I was watching the stock market collapsing 50% and the biggest investment banks and insurance companies in the world going bust.
MESSAGE FROM JACKO 535
It is 3.00am NY time Thursday January 28 and the market is at 1.4028
I want to open this Message with an apology. We have missed an excellent trade opportunity due to my excessive caution. I should not have closed my original Sell trades at 1.4495 and 1.4425.
As I said in Message 521, I am very optimistic about 2010. My strategy for 2010 is to keep longer trades and will be looking to add to the positions to compound up some profits. This was my strategy in 2006 and 2007 which resulted in some spectacular (!!) profits.
My strategy is to snare a some trades at a good Resistance /congestion area and then let the market downtrend look after the rest.
I have already had one opportunity that I fluffed last week when I closed out the Sells at 1.4495 and 1.4425 (see Message 529). At the current market price (1.4000), I would have been over over 900 pips ( 495 pips and 425pips respectively) better off between the 2 sets of positions if I had not closed them. Thats 900+ pips in less than 10 days. So you can see how easily it is to accumulate large numbers of pips on the longer time frames.
So I apologise for my decision to close those trades. My caution was a result of the last 18 months volatility and unusual trading circumstances brought about by the GFC. It has been difficult (and would have been financially irresponsible) to use the compounding strategy in the last 18 months because of the extreme volatility caused by the GFC and its after-effects. However, I have a completely different feel for 2010 than I did for 2009.
The market is feeling very similar to the 2006 year when I had an exceptionally good year. It was the start of the turn of the trend that lasted for two and a half glorious (and very profitable) years. We are still in the very early stages of the change in trend. The big issue to remember is that, (as sure as day follows night), this market WILL retrace some of this latest move down, giving us the opportunity to jump back in at a higher price and ride the trend back down. This down trend has a LOT further to go......!!!!!
Having said all that, my 1.4150 Sell order remains in place.
Edit 8.00am NY time Market is at 1.4013 I believe that the short term market low may have been made and that the market may move up. If you look at the Hourly chart, the exhaustion spike down to 1.3937 at 8.00pm NY time yesterday is clearly seen. (I don't use the Hourly chart as a rule, but it is the best chart to see today's exhaustion spike)
The downward exhaustion spike is usually a sign that there are no buyers left and selling has reached a climax. (Similarly, an upward exhaustion spike means that there are no sellers left and "at the market" buys rapidly rise as the sellers exit the market).
The exhaustion spike analysis is not infallible, but has a very high percentage correlation with the turnaround in a market.
My 1.4150 Sell order remains in place.
Note...US Core Durable Goods Orders and US Unemployment Claims are both announced at 8.30am this morning
Edit 12.10pm NY time Market is at 1.3975 Market has moved marginally lower. I am now just waiting for a retracement. The market is too low for me to be a seller at these levels. The probability of a reversal (which would take out any Stop Loss) is too high.
Edit 7.00pm NY time Market is at 1.3965 Having missed this downturn by closing out my trades too early, I am now forced to wait for the correction back up. That will give me the opportunity to again sell into this downturn. The target sell price of 1.4150 is less than 200 pips away. That is only a 2-3 days market movement. So I may sit on my hands for a while. I am not tempted to place a countertrend Buy trade. And the market is too low for me to be a seller at these levels
MESSAGE FROM JACKO 534
It is 3.00am NY time Wednesday January 27 and the market is at 1.4058
The market is bouncing off the Support line at 1.4050 and each bounce gets progressively weaker. The Support line will be broken very soon. I am watching to see if London is going to take it up one more time.
Edit 7.00am NY time Market is at 1.4077 (An early warning post) After taking out all the Stop Losses under 1.4050 in the first hour of London trading, the London traders have decided to take the market up one more time.
I have just placed my orders to SELL at 1.4150.
I have been trying to decide whether to go with the tighter 50 pips fixed Stop Loss or stay with the 100 pip fixed Stop Loss on this trade. I have decided to try to tighten up the Stop Losses now that the volatility is reducing in the market place compared to the previous 18 months. My Stop Loss is a fixed 50 pips at 1.4200
I will be back at 8.00am NY time and will send the SMSes as the market gets closer to our target price and our US traders start to wake up.
Edit 8.00am NY time Market is at 1.4080 I am still expecting the market to head back to the congestion area of 1.4150 but have difficulty breaking through it. I have placed my orders to SELL at 1.4150. My Stop Loss is a fixed 50 pips at 1.4200
I will be out at a function for a couple of hours and may not have the opportunity to SMS as the 1.4150 Sell orders are triggered. Will be back at 12.10pm NY time
Edit 12.15pm NY time Market is at 1.4050 Th market not moved much at all this morning. My order stays in place.
Edit 7.00pm NY time Market is at 1.4030 The market disappointed me today. I looking for the the market to move up to the congestion area of 1.4150 to sell into this market. The market moved sideways with a shallow dip caused by the FOMC announcement early the afternoon. The market is now recovering and my 1.4150 Sell order remains in place.
Emails
Email 1
I was wondering do you ever set yearly/monthly trading goals for you to achieve or do you just go with the flow and see what you end up with at the end of the year? I just go with the flow... The days of me being pressured to achieve my business goals is well and truly over. I have been there , done that, and don't want to go there again. My bankers in my previous businesses were always wanting more details to justify giving me more business funds. This forex trading business is sooo different from other "normal" businesses.
Do you ever mentally prepare yourself to get into a winning trading mindset before starting your trading day? Hmmm...not by the day...but I still get a buzz from opening a trade...I am always optimistic that it will be successful...if a trade goes wrong, i still get disappointed..but then I just remember that losses are just part of the business expenses in this business. (instead of enormous staff costs, excessive depreciation, losses from bad debts, obsolete stock, etc, the only real expense in this forex trading business is the occasional loss...). Then I try to get on with looking for the next trade opportunity.
Having said that, last year the Fund (which trades the exact same trades outlined here in the blog) made just on 2000 pips profit per lot for the year. Using a standard contract at USD$10 per pip, that is $20,000 per standard lot. Now the benefit of this business is leverage, so multiply the number of lots you trade and you can see the return. And remember, we are using very conservative risk of only 2% of trading capital on each trade. (Imagine what we could have earned if we increased our risk marginally to 5%)
Also remember that we have just endured the biggest financial crisis in 80 years
My subconscious is telling me that I want to do better, but I am also aware that this year will be a much better year than last because of the better, more stable, economic environment.
MESSAGE FROM JACKO 533
It is 3.00am NY time Tuesday January 26 and the market is at 1.4088
After a very dull US session yesterday and the Australian market being closed today for a National holiday, I expected volume to be thin in the Asian session.
While the volumes were thin (as advised by our brokers) the market has dropped marginally on reports that China's Central bank has increased their banks reserve ratios by 0.5% in an attempt to reduce the high growth in lending. This increased the value of the USD and sent the EUR down marginally.
(What is more amazing is that, if anyone had said just 5 years ago, that a decision of the Chinese Central bank would have had an significant impact on the EUR/USD, they would have been considered a crank and an idiot...) Such is the changing world we live in...
The downtrend is becoming more entrenched. I am looking for a position to short this market in the next 24-48 hours
Edit 8.00am NY time Market is at 1.4083 The downtrend has come down as low as 1.4068 towards the Support line at 1.4050. I am looking for a position to short this market in the next 24-48 hours
It will either bounce upwards from the Support (and I will look to sell it from the higher level of 1.4150+ with a 50pips Stop Loss)....
OR it will break the Support line (and I will look to sell it on the confirmation at 1.4050).
As stated in Message 517,
I believe that the trend has changed and that the market is heading down.... in the longer term.
The first long term SELL target would be the 50% fib from 1.2886 (April 21) and 1.5144 (Nov 23) at 1.4015 (or 1.4000 rounded down).
The second longer term SELL target would be the 50% fib from 1.2460 (March 3) and 1.5144 (Nov 23) at 1.3802.
I still believe that the market is heading down and that these 50% targets are in play.
Edit 12.05pm NY time Market is at 1.4083 The market has bounced off the 1.4050 Support line. I am looking to sell it from a higher level of 1.4150+ . (I am not being seduced into a quick short term opportunistic long this time!!!)
For the adventurous traders. I would expect this market to gradually float back up to the congestion area of 1.4150 in the US afternoon session and stay there for the start of the Asian session
Edit 7.00pm NY time Market is at 1.4080 After reaching as high as 1.4106, the market has retreated. The fact that the market was not able to power up to 1.4150 indicates that any move up is not strong. I am still expecting the market to head back to the congestion area of 1.4150 but have difficulty breaking through it.
I am still keen to sell it from the higher level of 1.4150+ with a 50 pips Stop Loss
MESSAGE FROM JACKO 532
It is 3.00am NY time Monday January 25 and the market is at 1.4150
Last week showed the impact of an impulsive trade. Because I was being more active, I took an impulsive and speculative long trade against the main down trend.
The loss from that trade was not significant (it was a reduced size Stop Loss). However, the impact was that it threw me off the main strategy for the much better short position (that would have been placed if I had not been in the impulsive long trade).
I am looking for a trading position. There is no news events on the calendar today.
I have my charts open to 300 periods of the Daily time frame.
The Resistance line. is found by linking up the highest points on the daily chart starting from 1.5140 (Dec 2) and 1.4579 (Jan 12) , with the resistance line today at 1.4400.
The Support line is found by linking up the lowest points on the Daily chart starting from 1.2460 (March 3) and 1.4029 (Jan 20) you will see that the Support line today was at 1.4050.
With the market currently at 1.4150, we are in no-man's land
Edit 8.00am NY time The market is at 1.4158. We are still sitting in no-mans land, but in the lower end of the range.
Edit 12.10pm NY time Market is at 1.4146 The market has stayed in a tight range this morning. The lack of any news items contributed to the quiet market, but hopefully we might see some movement later today.
Edit 7.00pm NY time Market is at 1.4150 A very dull US session today. The Australian market is closed today for a National holiday, so volume will be thin in Asian session. I will be back for London open.
MESSAGE FROM JACKO 531
It is 3.00am NY time Friday January 22 and the market is at 1.4153
After being beaten down all week, the Euro looks as though it is starting to fight back .
As stated yesterday, it looks as though the 50% Fib line of 1.4015 (actual low is 1.4029.... which is near enough) is the short term low and we are seeing the start of a retracement back up to the 1.4300 mark (50% of the down move from the Jan 13 high of 1.4579 to yesterdays low of 1.4029).
The adventurous traders may want to go long to 1.4300 but use a tight SL. (I would now wait for a pullback to under 1.4150 before buying)
Edit 8.00am NY time Market is at 1.4122 The market has moved back down but is still well clear of the 4.1029 low. Not much was happening in the European session. Lets see what the US morning session brings. There are no news events planned for today.
Edit 12.05pm NY time Market is at1.4152 The market remains directionless today.
Edit 7.00pm NY time Market is closed. This week showed the impact of an impulsive trade. Because I was being more active , I took an impulsive and speculative long trade against the main down trend. The loss from that trade was not significant (it was a reduced size Stop Loss). However, the impact it had on not being prepared for the much better short position (that would have been placed if I had not been in the impulsive long trade) was that it threw me off the main strategy. (Mrs Jackson is still giving me grief about it......LOL)
MESSAGE FROM JACKO 530
It is 3.00am NY time Thursday January 21 and the market is at 1.4088
As stated yesterday, the news out of Europe has been horrible this week for the Euro (first the bad German ZEW numbers and then the very strong rumors that Greece will default). Assuming that there is no further bad news out of Europe, I am expecting the 50% fib on the Daily charts from 1.2886 (April 21) and 1.5144 (Nov 23) at 1.4015 (or rounded to 1.4000) to potentially hold the line and set off a retracement back up.
It is hard to see such deep negative news continuing at the level of intensity seen earlier this week (unless Greece does default, triggering 4-5 other EU country defaults). If that happens, then you can say goodbye to the Euro at anything above 1.2500.
I am going to sit on the sidelines until I can see a clearer resolution to the two differing trade options. The market is still moving down but has stabilized over the last 15 hours. We may have seen the short term low at 1.4068. The 1.4000 - 1.4050 area may be the line that holds.
If it does then the market could initially retrace up to the 1.4300 mark (50% of the move the Jan 13 move from 1.4579 to todays 1.4067).
Edit 8.00am NY time Market is at 1.4073 After touching a low of 1.4029, the market has moved up to its current price. We may be seeing the bounce up off the 50% Fib line. The probability of a bounce up from a major Daily 50% Fib line is more than 50%. I am still on the sidelines watching this action before making a decision.
Edit 12.01pm NY time Market is at 1.4109 Market is being buffeted by the news today (a quick 50 pip drop at 10.00am on the Philly Fed Manufacturing Index and now a quick 80 pip jump on Obamas speech about the banking industry).
Best to stay out until this market stabilizes. But it looks as though the 50% Fib line of 1.4015 is holding. We may see the start of the retracement back up very soon.
Edit 7.00pm NY time Market is at 1.4093 It looks as though the 50% Fib line of 1.4015 is holding. We may see the start of the retracement back up very soon. If it does then the market could initially retrace up to the 1.4300 mark (50% of the Jan 13 move from 1.4579 to todays low of 1.4029).
MESSAGE FROM JACKO 529
It is 3.00am NY time Wednesday January 20 and the market is at 1.4192
I have been getting a very hard time from Mrs Jackson today. She keeps telling me that I knew what the market was going to do...But I tried to be waaay too smart.
She has made me print off the following from Message 517,
I believe that the trend has changed and that the market is heading down.... in the longer term.
The first long term SELL target would be the 50% fib from 1.2886 (April 21) and 1.5144 (Nov 23) at 1.4015 (or 1.4000 rounded down).
The second longer term SELL target would be the 50% fib from 1.2460 (March 3) and 1.5144 (Nov 23) at 1.3802.
And from Message 526 (when I had sold at 1.4495 and the A-H at 1.4425)
I am trying to establish a couple of long term "hold" trades so I am tempted to leave the trades alone.
If I had followed my own strategy and left those 1.4495 and 1.4425 sell trades alone to play out as long term "hold" trades instead of trying to be so smart and trading too actively, I would have been in a much better position this week.
Hmmm.... Head has been smacked .... Lesson reinforced....No more "cowboy" trades.
Now waiting for a retracement so that I can sell back into the downtrend. The broken Daily Support line at 1.4320 has now become the Resistance line.
Edit 8.00am NY time Market is at 1.4143 Market has been dropping. I am still getting a hard time from Mrs Jackson... My head is still getting smacked ... Still waiting for a retracement so that I can sell back into the downtrend.... BUT I am not going to chase this market
Edit 7.00pm NY time Market is at 1.4111 I took some time off today away from the charts to clear my head. There is only one thing worse than a loss trade ... and that is a missed winning trade (especially when we knew what it was going to do...).
The news out of Europe has been horrible this week (first the German ZEW numbers and then the very strong rumors that Greece will default). So I am expecting the 50% fib outlined above to potentially hold the line and set off a retracement
It is hard to see such deep negative news continuing at that level of intensity (unless Greece does default, triggering 4-5 other EU country defaults). If that happens, then you can say goodbye to the Euro at anything above 1.2500
MESSAGE FROM JACKO 528
It is 3.00am NY time Tuesday January 19 and the market is at 1.4408
The market moved very little in the last 24 hours trading, because the US market was closed due to Martin Luther King day and there were no news items.
However, the market is creeping up towards my sell target of the 1.4450- 1.4500 area. I eagerly waiting to sell into this market again at that price area.
I have now placed a SELL order at 1.4490 (Just under 1.4500 Resistance area). I have a 100 pip Fixed Stop Loss on it.
I will send the SMSes later as it gets closer and as Europe and the Americas are more awake. (I try not to wake traders unnecessarily...).
Edit 8.00am NY time Market is at 1.4270 The market has taken a big dump today in European trading on the basis of very poor German ZEW Economic Sentiment numbers. The drop was so unexpected and the reaction so fast that it was not possible to get on the trade unless a trader was on his terminal. Interestingly, the market quickly dropped 60+pips immediately BEFORE the numbers were released. It then quickly dropped another 80 pips immediately after the numbers were released
However, the US session is the first sesssion back after the Martin Luther King long weekend and that may reverse some or most of the move down.
But this fast move down (lack of buyer support !!) also confirms that the long term trend down is gaining strength.
Edit 8.25am NY time Market is at 1.4290 The fall in the European session may have been overdone. I missed the drop in the Euro session but I believe that the US session will reverse some (or most) of this drop. I am taking a countertrend BUY trade at 1.4300 or less.
Edit 8.28 am NY time I have just bought at 1.4290 IMPORTANT I have a 50pip Stop Loss at 1.4240 This is a risky countertrend trade and I am not prepared to risk more than 50 pips
Edit 8.42m NY time Market has dropped back to as low as 1.4285 at 8.38am allowing everyone to get set on this trade. Because this is a risky countertrend trade, I am setting an initial Target Price of only 1.4400
Edit 12.10pm NY time Market is at 1.4270 The market has been as low as 1.4252. I am letting this trade play itself out.
Edit 7.00pm NY time Market is at 1.4277 My counter trend trade has not been doing much. After going as low as 1.4252, it has moved up marginally. I was expecting a bigger reversal during the US session, but it may happen now in Asian trading. On the Daily chart we are in the bottom of the range for the last 21 trading days (since Dec 17). It will either retrace up (good for my trade) or try to break the lows of the last 21 days (in which case I will be stopped out for 50 pips).
I am expecting the reversal in Asian trading
Edit 9.00pm NY time The market has had a quick and abrupt drop of 100 pips on news of a large problem with fiscal problems in Greece and the potential impact on the European Union. My Stop loss was hit at 1.4240 at 8.18pm for a 50pip loss.
MESSAGE FROM JACKO 527
It is 3.00am NY time Monday January 18 and the market is at 1.4381
After closing my last two trades for a good 150 pip profit, I am now hoping that the market will retrace up higher so that I can re sell this week at a higher entry price. I still believe that the longer term trend is a down move. If this market retraces to the 1.4450- 14500 area in the next 12-24 hours, I will be a definite Seller.
Even though 2009 was a solidly profitable year with strong results, the returns were much smaller than in previous years. However, I believe that 2010 will be much more similar to 2006 and 2007 where the returns were significantly higher.
The awful effects of the Great Financial Crisis(the huge volatility, the uncertainty, the fear, the illiquidity) over the last 18 months has started to disappear. Traders are already beginning to forget that for the last 18 months we were on the precipice of the most dangerous meltdown of the worlds financial system in the last 80 years (or the last two generations) since the Great Depression of 1930's. I can feel the confidence coming back into the market and also in my own trading since the start of this year.
I am prepared for some aggressive trading this year. I will be maintaining my risk level at 2% of the account but will be looking for more opportunities now that the volatility has fallen to its long term average.
I have my charts open to 300 periods of the Daily time frame.
The Resistance line. is found by linking up the highest points on the daily chart starting from 1.5140 (Dec 2) and 1.4579 (Jan 12) and 1.4555 (Jan 13) , with the resistance line today at just above 1.4500.
The Support line is found by linking up the lowest points on the Daily chart starting from 1.2460 (March 3) and 1.4264 (Jan 7) you will see that the Support line today was at 1.4320.
The 50% Fib line The market appears to be struggling to break up to the 1.4700 mark which is the 50% fib from 1.5140 (Dec 3) to 1.4217 (Dec 21) at 1.4679 (or 1.4700 rounded).
NOTE The US market will be closed today in observance of Martin Luther King day.
Edit 8.00am NY time Market is at 1.4375 The market has moved very little in European trading, perhaps in recognition that the US market is closed today due to Martin Luther King day and that there is no news items today.
Edit 12.05pm NY time Market is at 1.4389 The market is very quiet in thin holiday trading.
Edit 7.00pm NY time Market is at 1.4404 The market is creeping up towards my sell target of the 1.4450- 1.4500 area. I eagerly waiting to sell into this market again at that price area.
MESSAGE FROM JACKO 526
It is 3.00am NY time Friday January 15 and the market is at 1.4412
My two trades are doing well. My first sell at 1.4495 is now in profit with a SL at breakeven. My second sell is my A-H trade sell at 1.4425 is only marginally in profit. Its SL is set at the same prce as the first trade at 1.4495.
I am letting the trades play themselves out for a little longer. My initial target was 1.4325 which allows the A-H fallen soldier to redeem himself. I am trying to establish a couple of long term "hold" trades so I am tempted to leave the trades alone. However, the market may try to retrace in the London session so I am watching closely for any signs of a major retrace and will jump out and Sell again later
I have a buy order to close out the trades at 1.4325 in place at the present time
(If I am lucky enough to be closed out at that price I will then wait for a retracement to get back in again later with a sell at a higher price)
Edit 7.23am NY time Market is at 1.4384. As you know, the market often reverses the move from one session to the next. I think that the US session may reverse the Euro session down move. I think that the US market may take the Euro up today. I have just closed all my trades at 1.4385. Will sell again next week.
Profit from Trade one is 110 pips. Profit from the A-H trade is 40 pips. Total 150 pips
Edit 8.00am NY time Market is at 1.4381 The market has moved marginally lower. The big market players have been returning to work this week with a significant and noticeable increase in volume today compared to earlier this week and it is vastly different from the previous weeks Christmas and New Year vacation period.
As I said in Message 517, I believe that the trend has changed and that the market is heading down.... in the longer term.
The first long term SELL target would be the 50% fib from 1.2886 (April 21) and 1.5144 ((Nov 23) at 1.4015 (or 1.4000 rounded down).
The second longer term SELL target would be the 50% fib from 1.2460 (March 3) and 1.5144 (Nov 23) at 1.3802.
As I said in Message 521, I am very optimistic about 2010. I am hoping to keep longer trades and will be looking to add to the positions to compound up some profits. This was my strategy in 2006 and 2007 which resulted in some spectacular (!!) profits. It has been difficult (and would have been financially irresponsible) to use the compounding strategy in the last 18 months because of the extreme volatility caused by the GFC and its after-effects. However, I have a completely different feel for 2010 than I did for 2009.
The market is feeling very similar to the 2006 year when I had an exceptionally good year. It was the start of the turn of the trend that lasted for two and a half glorious (and very profitable) years. After the turmoil and insane volatility during the 15 months of the GFC, I am soooo ready for this years trading.
Edit 12.15pm NY time Market is at 1.4381 After closing my two trades for a good profit, I am now hoping that the market will retrace up higher so that I can re sell next week at a higher entry price. I still believe that the longer term trend is a down move.
MESSAGE FROM JACKO 525
It is 3.00am NY time Thursday January 14 and the market is at 1.4537
In the last hour, the market has again tested the upper limits of the 1.4500 (plus or minus 50 pip) range that has been in place most if this week. The market may still be trying to get to that 50% fib from 1.5140 (Dec 3) to 1.4217 (Dec 21) at 1.4679. IF London tries to take it up again, it may get there this time.
I am still looking for another trade opportunity and may put the A-H trade on the back burner until the market gets back down closer.
I am interested in placing my trade in the US session today as there is an ECB Interest Rate Statement, US Core Retail Sales and US Unemployment Claims, all being released at 8.30am NY time today. I am looking to trade after the news is all out.
However, I am also watching the London session for any opportunity.
Edit 8.00am NY time Market is at 1.4490 . My A-H order to sell at 1.4425 is still in place and waiting to be activated.
Edit 12.05pm NY time Market is at 1.4478 The market is continuing to stay in this 1.4500 (plus or minus 50 pips) area. The market seems becalmed with no clear direction at the present time. My A-H order to sell at 1.4425 is still in place and waiting to be activated.
A very dull market so far this week.
Edit 7.00pm NY time Market is at 1.4500 The market is continuing to stay in this 1.4500 (plus or minus 50 pips) area. Actually, it has spent 95% of this week in the 1.4475 - 1.4550 range which is even tighter. A very dull market.
Edit 7.25pm NY time Market is at 1.4494 I have been looking at the 4H charts and it appears that it may be rolling over in the short term. I have decided to take a quick speculative trade. I will be a seller at around the 1.4500 area
Edit 7.35pm NY time I have just SOLD at 1.4495 I have a 100 pip hard Stop Loss on this trade.
My A-H trade order is still in place. If it gets picked up I will be in at double risk load
Edit 11.25pm NY time Market is at 1.4430 I have been having a nap. My A-H trade was picked up some 2.5 hours ago (at 9.20pm NY time). I now have two trades running (1.4495 and the A-H at 1.4425). So I am running at 4% risk for the combined trades.
I have now moved my SL to 1.4495 for both trades, so the first trade is at Break Even and the A-H trade has a maximum exposure of (currently) 70 pips
I am letting the trades play themselves out for a little longer. My initial target is 1.4325 which allows the A-H fallen soldier to redeem himself.
Emails
Email 1
You currently have a A-H trade in place, however as you've stated it looks like the market is trying to retrace to the 50% fib at around 14700. If the market was to hit this level would you:
a) consider placing a trade here and remove the A-H or,
b) consider placing a trade and keep the A-H trade in place for when the market falls again, This (b) is the preferred option
c) wait for it to fall again and pick up the A-H trade?
Email 2
As a noob I've been a bit confused about how you have been determining that the market is in a down trend long term. See the break of the Daily Support line on Dec 3
Firstly, can it be as simple as that once the trend has turned the direction is set for some time? That doesn't seem likely to me. Yes, it sets a change in sentiment in traders, investors and then policy makers. The markets sentiment and expectations are the main drivers of market price
Secondly, I've been drawing support lines on the daily chart from Mar4 to Dec4, 2009 where I can see the support was breached. Yes
Then follows an obvious trend reversal to downwards up until about Dec22 where things kind of went sideways until the NFP numbers. If I am only looking at the chart how can I determine that the trend is still downward? We are waiting for the second top to be put in place, probably around the 1.4650- 1.4700 area. Then we will have a very strong Resistance line (linking the Dec 3 high and the new high at 1.4650-1.4700) and that will be the major trend line for the next 12 months
Email 3
I'm guessing that you may not be positive about this but I'd like your opinion on something like ( trade testing software package). Can it be beneficial to only practice on historical charts sans the benefit of fundamentals? Or is it enough to just work from MT4's own historical data? I don't have a problem with testing, but these packages will draw you deeper and deeper into a vast array of "indicators"...... Beware. Indicators don't work!
The markets strongest influence is "expectation". That is why S&R lines, 50% fibs and, to a lesser degree, Round Numbers are so important. So many of the big players use only those rules on long time frames that the "expectation" of where it will go becomes almost self fulfilling.
Also, may I ask what your process of approaching the market is of a morning? Your thought processes on the blog are invaluable but I find that I need some really basic direction as to how I should approach the market. A methodology. I realize after a couple of burns before joining you that the worst thing I can do is to first thing in the morning open MT4 and get sucked into a trade. It is very rare that a trade will just jump up at you from out of nowhere (especially when you first open your platform). Your trades should be developments of market action from the previous days
So, what can I do to help me slow down? Besides just committing to following your own trades and analysis? Or is it really just that simple? Define the direction of the trend and be patient? Yes !!!! Warren Buffett is the second richest man on the planet and he trades maybe 5-10 times a year. (He has always been a long term trader) Yet every new, young stock trader believes that they need to be a frantic daytrader to make money...Go figure???
MESSAGE FROM JACKO 524
It is 3.00am NY time Wednesday January 13 and the market is at 1.4488
The market is continuing to stay in this 1.4500 (plus or minus 50 pips) area. The market seems becalmed with no clear direction at the present time.
My A-H order to sell at 1.4425 is still in place and waiting to be activated.
A very dull market so far this week. There is not even a decent sized news event on the forex calendar. However, the market is rarely becalmed like this for too long.
Edit 8.00am NY time Market is at 1.4563 In the last hour, the market has been testing the upper limits of the 1.4500 (plus or minus 50 pip) range that has been in place all week. It may be that the NFP on Friday has triggered a stronger and longer correction upwards than expected. The market may be trying to get to that 50% fib from 1.5140 (Dec 3) to 1.4217 (Dec 21) at 1.4679.
Edit 12.05pm NY time Market is at 1.4491 The market attempt to break out above 1.4550 was, as I thought, both tentative and unconvincing.
The break out was less than 30 pips in size. And it has fallen straight back to the 1.4500 (plus or minus 50 pip) area. But the market has much more volume today.
Speaking with our brokers, they advise us that all the big market players have been returning to work this week with a significant and noticeable increase in volume today over the last two days. Prior to this week, it was very, very thin Christmas and New Year holiday volumes.
Edit 7.00pm NY time Market is at 1.4523 The market has reverted back into its 1.4500 (plus or minus 50 pip) area. My A-H order to sell at 1.4425 is still in place and waiting to be activated.
I am starting to look for another trade opportunity and put the A-H trade on the back burner, until later
Emails
There are a small number of outstanding emails from the last two days which I will respond to after the US trading session today (and I have had a nap).
In my defense, this week we have been receiving Brokerage Presentations from our various Brokers on their Outlooks for 2010, which are very comprehensive and detailed, but leave me wondering how they believe that they can analyse it so deeply. My limit of the view of the EUR/USD is that I personally believe that the EUR/USD is going to fall significantly this year. The brokers are so far equally split. One has a higher EUR/USD projection and one has a lower EUR/USD projection. We have another presentation this afternoon (US time) so I will be interested to see what they project.
Also, my Office Manager (Sally) and her Admin Assistant returned from their annual Christmas /New Year break today so the office is back at full strength. (Thank God... because I hate all the paperwork).
Thankfully, the vacation period is now over and we can all get back to work.
MESSAGE FROM JACKO 523
It is 3.00am NY time Tuesday January 12 and the market is at 1.4512
The market is continuing to stay in this 1.4500 (plus or minus 50 pips) area. However, as I stated yesterday, the impact of the NFP rarely lasts more than two or three days so I expect to see the market resume its downward trend very soon.
My A-H order to sell at 1.4425 is still in place and waiting to be activated. Until then, I am on the sidelines. (I am NOT a seller at the current higher levels than the A-H trade because I want proof that the downtrend is back in place. That is why the A-H trade stays at 1.4425. It will get activated only if the downtrend is back in place).
Edit 8.00am NY time Market is at 1.4499 My A-H order to sell at 1.4425 is still in place and waiting to be activated. Until then, I am on the sidelines.
Edit 12.10pm NY time Market is at 1.4522 The market is continuing to stay in this 1.4500 (plus or minus 50 pips) area. The market seems becalmed with no clear direction at the present time.
Edit 7.00pm NY time Market is at 1.4475 This is a real test of patience. It is also a good example of how a market can basically meander around a set number (in this case 1.4500) for an extended period of time
Emails
Email 1
I just had a question regarding the last trade. I have a hard time to see what will happen to the market as it approaches the support. The market does not like Support and Resistance lines. Most of the time they will quickly bounce away from them .
IF a market hangs around a Support or Resistance line, it will usually break it. In this case the market moved down to the Support line in readiness for the NFP announcement. I think that the market was fully expecting the NFP numbers to be very small (and was ready to break down through the line quickly) and got a big shock when the actual numbers came out (and so bounced it back up )
Like everyone else, I was expecting the NFP numbers to be much smaller than they were.
IF that had happened we would have seen a 150 pip move down. (The NFP and also the FOMC announcement has the power to change the whole sentiment of the market for a couple of days). I was in profit, so I decided to take the trade and use the markets money As it turned out, it was the wrong decision
MESSAGE FROM JACKO 522
It is 3.00am NY time Monday January 11 and the market is a 1.4491
The market has moved up in Asian trading as the impact of the disappointing NFP numbers from Friday continues to resonate through the market. However, the impact of the NFP rarely lasts more than two or three days so I expect to see the market resume its downward trend very soon.
My last trade was stopped out at 1.4425. The market has moved 50 pips past my SL on the last trade at 1.4425. The market has moved higher than 1.4475 (which is 50 pips past the SL) so my AH trade has now been placed.
I have an A-H SELL order at 1.4425. When the market starts to resume the downtrend, it will trigger the order at 1.4425 and we will start to recoup our losses on the last trade.
The adventurous traders I am very confident that this market has NOT changed the trend and is still in a downtrend. The move up from the NFP will possibly prove to be a short term over-reaction. Adventurous traders may want to SELL from a higher level that 1.4425...I would suggest anything above 1.4475 is a good opportunity
Edit 8.00am NY time Market is at 1.4523 My A-H order to sell at 1.4425 is still in place and waiting to be activated. Until then, I am on the sidelines.
Edit 12.10pm NY time Market at 1.4538 I am still on the sidelines. The market is trying to move to the 50% fib from 1.5140 (Dec 3) to 1.4217 (Dec 21) at 1.4679
Edit 7.00pm NY time Market is at 1.4508. The US session was a very dull session today. My A-H order to sell at 1.4425 is still in place and waiting to be activated. Until then, I am on the sidelines.
The adventurous traders I am very confident that this market has NOT changed the trend and is still in a downtrend. The move up from the NFP will possibly prove to be a short term over-reaction. Adventurous traders may want to SELL from a higher level than my A-H trade level 1.4425...I would suggest anything above 1.4475 is a good opportunity. I know that all of you got set at 1.4500- 1.4550. (The market has not been below 1.4500 since I posted the originalrecommendation)
MESSAGE FROM JACKO 521
It is 3.00am NY time Friday January 8 and the market is a 1.4325.
After closing my 1.4400 SELL trade yesterday at 1.4310 for a 90 pip profit, I watched the market bounce back up. (Remember, that was my trade with the award winning worst entry, so everyone else should have easily made more pips than me)
My second trade was when I decided to sell again two hours later. My sell at 1.4325 is progressing well. It has a fixed Stop Loss at 1.4425.
NOTE Today is NFP day. The NFP numbers are the biggest market movers on the Forex calendar. Unless I am satisfied with the progress of the market prior to the announcement, I may consider closing the trade and re-opening it after the NFP announcement
As discussed in Message 517, I believe that the trend has changed and that the market is heading down.... in the longer term.
The first long term SELL target would be the 50% fib from 1.2886 (April 21) and 1.5144 ((Nov 23) at 1.4015 (or 1.4000 rounded down).
The second longer term SELL target would be the 50% fib from 1.2460 (March 3) and 1.5144 (Nov 23) at 1.3802.
I am hoping to keep this trade and will be looking to add to the positions to compound up some profits. This was my strategy in 2006 and 2007 which resulted in some spectacular (!!) profits. It has been difficult (and would have been financially irresponsible) to use the compounding strategy in the last 18 months because of the extreme volatility caused by the GFC and its after-effects. However, I have a completely different feel for 2010 than I did for 2009.
While 2009 was a very successful year, given the GFC and the aftermaths of that on the banks and stock market, I am very optimistic about 2010. The market is feeling very similar to the 2006 year when I had an exceptionally good year. It was the start of the turn of the trend that lasted for two and a half glorious (and very profitable) years. After the turmoil and insane volatility during the 15 months of the GFC, I am soooo ready for this years trading.
On a more sombre note, members of this trading group will know that I have allowed each of you to view the progress of the Jackson Fortress Fund in the Jackson Fortress Funds blog site. We are very proud of our Fund. It has shown excellent returns over the 18 months that it has been operating. During the time of the GFC, we continued to deliver substantial profits (both in dollar terms and percentage terms) every Quarter. The Fund has never had a negative Quarter and has been performing well above industry average. The current Quarter is also on track to be profitable. We know of no other Fund that allows its investors to see the live trades for every trade it takes. As you know, I am NOT a signal seller, the trade calls I send to you are the exact same trades that I place for the Fund and my own personal account.
I gave everyone free and unfettered access to show the workings of a true working Managed Fund, using a special User ID and Password.
Unfortunately one or two misguided members of this group have given the User ID and the Password to non-members of the group. They, in turn, have used selective parts and selective trades on that blog to criticize me, and our Funds performance, on forums.
I don't wish to spend my time countering statements by immature posters hiding behind the anonymity of the internet on various Forums. I have therefore deleted the compromised special User ID and Password and will be restricting the blog site only to the investors for the present time.
Needless to say I am disappointed that I have had to do that, because it was an excellent way for you to see the summary of all our trades here, but Mrs Jackson will not allow our personal names and the Fund to be openly denigrated on the internet.
I have therefore temporarily restricted access to the Funds blog to only the investors at the present time.
Edit 8.00am NY time The market is at 1.4289 As expected the market has moved to the Support line area for the critical NFP announcement. (This is usual... The NFP announcement will decide whether the market bounces up again in a retracement OR breaks down in a continuation of the cuurrent down trend) I am in profit in my latest sell trade at 1.4325 so I have decided to use that profit cushion to stay in the market during the NFP announcement. My Stop Loss is still at 1.4425.
Edit 12.10pm NY time The market is at 1.4370 The market had its usual large reaction to the NFP numbers. Unfortunately, it was not in out favor. The market rose dangerously close to our Stop Loss at 1.4425 when it rose as high as 1.4414 before falling back. I am letting this trade play itself out some more.
Edit 6.00pm NY time The market is closed. The NFP had its usual large erratic moves again today. After shooting UP 143 pips (1.4272-1.4415), it then dropped DOWN 115 pips (1.4415- 1.4300) then again shot back UP 138 pips (1.4300 - 1.4438). And that was before before lunch !!
The impact of that last move up was that our Stop Loss was triggered. I am now waiting for the A-H trade to be activated. I believe that the NFP was a typical over-reaction and that the market will continue its downtrend next week. For the A-H to be activated, the market needs to move up to 1.4475 or higher, which will then set a SELL order where we were stopped out at 1.4425. As the market moves back down, we will recover all of our losses from the last trade.
Emails
Email 1
Why did you close the first short trade (from 1.4400 to 1.4310), only to re-open the trade 2 hours later at 1.4325. I actually see the two trades as being the same trade. That is, a SELL from 1.4400. However, when a market gets close to a Support or Resistance line, if you think that the market is getting close to a breakdown, sometimes you can close the trade and then wait for any bounce to get back into the trade at a better price and pick up some extra pips. In this case, I was reasonably certain that the market is trending down, and had bounced off the Support enough times, and was heading for a possible break down of 1.4300, so I closed out the first trade to lock in profits. But, in case the market bounced up marginally, I saw it as an opportunity to get back into the down trend at a better price (1.4325 vs my exit at 1.4310). That is what I did
My counter-trend BUY trade at 1.3925 is progressing well. (currently 50+ pips in profit).
I am continuing to let the trade play itself out. I have just moved my Stop Loss to Break Even (1.3925).
I am also interested in adding another trade to the current trade at 1.4025. (That is, 100 pips above the first trade and just above the 1.4000 round number Resistance barrier)
The Stop Loss for both trades will 1.3925. (That is, the first trade's Stop Loss is at Break Even and the second trade has a maximum possible loss of 100 pips).
Edit 3.15am NY time Market is at 1.3975. I have just placed an order to BUY at 1.4025 ( I want the market to break above 1.4000 before I get set...). It has a fixed 100 pip Stop Loss
Edit 8.00am NY time Market is at 1.3994 . Our BUY at 1.4025 orders were filled when the market reached a high of the 1.4025. (I set that price hoping to avoid the extremes of the 1.4000 stop hunts and market movements but got caught at the very extreme edge...Hmmmm). I am now letting the trades play themselves out.
We have the ADP Non Farm Payroll numbers coming out at 8.15am NY time and the ISM Non Manufacturing PMI numbers coming out at 10.00am NY time.
Edit 8.30am NY time Market is at 1.3963. The ADP NFP came in better than expected and has strengthened the USD (causing the Eur to fall). Still letting the trades play themselves out. We may have seen most of the reaction to the ADP NFP news.
Edit 12.05pm NY time Market is at 1.3908 The market has reversed on the better than expected ADP NFP numbers closing out both our trades. The initial trade was closed out at Break Even, but the second trade was closed for a full 100 pip loss. A disappointing outcome for these two trades.
Edit 7.00pm NY time Market is at 1.3897 It was a disappointing outcome for the last trade. However as I sit here and review the trade in the cold light of morning, given the same set of circumstances (and not knowing the outcome), I would still have taken the trades. The hitting of the second trade at the absolute high was "unfortunate" (that's an understatement!!!). But I am, after all, a trader. And as a trader, I saw what I considered was a potentially good opportunity of two long trades pushing up to the Daily Resistance line. So, I accept that I was wrong and move on to the next trade.
MESSAGE FROM JACKO 538
It is 2.40am NY time Tuesday February 2 and the market is 1.3940
As I said yesterday, I want to turn up the trading and generate some exceptional numbers for the 2010 year.
I believe that this market WILL retrace some of this latest move down. I am seeing evidence of a turn in the market in the last day or two after the market reached its low of 1.3852 on Sunday evening NY time. .
I am now seeing the short term resistance line at 1.3950 as a line that will soon be broken. The market usually moves away from a Resistance line quickly, but the market is hanging around this line. That usually indicates a break of the line is about to happen
The market will instead try to move up to the longer term Daily Resistance line at 1.4200. (We may see some short term resistance at the 1.4000 round number area).
I am taking a counter trend trade at 1.3950 (or lower) with a 100 pips fixed Stop Loss (which would be at 1.3850 or lower...which is below the low set earlier this week).
This is a RISKIER trade than normal so if you are more risk averse at the time, then do NOT take this trade. Wait until the market gets up to the Daily Resistance line at 1.4200 and then Sell into the trend.
But I am much more confident in my trading at the moment and feel keen to play both sides of the market.
Edit 2.55am NY time Market at 1.3942 I would like to buy these at 1.3900... but I am not sure it will get that low....
Edit 3.20am NY time I have just bought at 1.3925. My Stop Loss is at 1.3825
Edit8.00am NY time Market is at 1.3938. I am letting my trade play itself out. My Stop Loss is at 1.3825 and my initial target is 1.4200.
Edit 12.05pm NY time Market is at 1.3955 I am now just letting the trade play itself out.
Edit 6.30pm NY time Market is at 1.3969 ( NOTE :This edit is earlier than my normal 7.00pm Edit because I have an appointment this morning here in Hong Kong)
I am continuing to let the trade play itself out. I am looking at moving my Stop Loss to Break Even sometime soon. But I am not in a rush to do so. I am more interested in getting to a position (around 1.4025) where I can add another trade to the current trade and move the Stop Loss for both trades to 1.3925. That way the first trade is at Break Even and the second trade has a maximum loss of 100 pips.
(These are just my thoughts at the present time.)
MESSAGE FROM JACKO 537
It is 3.00am NY time Monday February 1 and the market is 1.3880
January 31 saw the end of another Quarter. We are currently having our accounts prepared and audited in the next two days. Again we have closed another Quarter in profit.
We are proud of the fact that we have never had a losing Quarter. However, much more importantly this year, I want to turn up the trading and generate some exceptional numbers for the 2010 year.
After a very ordinary November and December caused by the market topping/turning and by the lead up to Christmas when I was feeling really fatigued from the market , January saw a small 140 pip profit for the month.
However that was overshadowed by the excellent trading opportunity that I fluffed midway through the month when I closed out two Sells trades early at 1.4495 and 1.4425 due to my excessive caution (the final residual effect of the GFC). (see Message 529).
At the Round number market price (approx 1.4000), I would have been over over 900 pips ( 495 pips and 425pips respectively) better off between the 2 sets of positions if I had not closed them. Thats 900+ pips in less than 10 days. So you can see how easily it is to accumulate large numbers of pips on the longer time frames. Furthermore, the market then extended that move......
Having said all that, my confidence has surged this month since the beginning of this 2010 year. The break over Christmas and the New Year was a major turning point for me. (I needed a break after the last 18 months of the effects of the GFC)
The market is again feeling very familiar to me. The uncertainty of the GFC is gone and I am becoming much, much more confident that my trading decisions in the next 12 months will be profitable for the Fund, the trading group and myself.
As I said in Message 521, I am very optimistic about 2010. My strategy for 2010 is to keep longer trades and will be looking to add to the positions to compound up some profits. This was my strategy in 2006 and 2007 which resulted in some spectacular profits.
My strategy is to snare a some trades at a good Resistance /congestion area and then let the market downtrend look after the rest.
I am also keen to get back into compounding my trades. (Adding to open trade positions) It has been difficult (and would have been financially irresponsible) to use the compounding strategy in the last 18 months because of the extreme volatility caused by the GFC and its after-effects.
However, 2010 is looking like a completely different animal compared to the GFC horror year of 2009. The market is feeling very similar to the 2006 year when the trend changed and I had an exceptionally good year.
We are still in the very early stages of the change in trend. The big issue to remember is that, (as sure as day follows night), this market WILL retrace some of this latest move down, giving us the opportunity to jump back in at a higher price and ride the trend back down. This down trend has a LOT further to go......!!!!! I think that 1.3000 will be easily reached. I think that 1.2500 is highly possible. And I think that 1.000 will be hit before we see a break of the 1.6000 again. I am a strong USD bull.
TODAYS TRADING
I have my charts open to 300 periods of the Daily time frame.
The Resistance line. is found by linking up the highest points on the daily chart starting from 1.5140 (Dec 2) and 1.4579 (Jan 12) , with the resistance line today at 1.4200.
However, I am actively looking at the more aggressive, shorter term Resistance line from 1.4555 (Jan 13) and 1.4411 (Jan 19) and 1.4178 (Jan 25) which is currently at around 1.3950.
The Support line is of no real value at the present time since there is no upward sloping Support lines of value in any proximity.
I am waiting for a sizeable retracement The aggressive target sell price of 1.3950 is less than 100 pips pips away. So I may sit on my hands for a while.
I am not tempted to place a countertrend Buy trade. And the market is too low for me to be a seller at these levels. However I may look at some more aggressive selling strategies with smaller Stop Losses for this week.
Edit 8.00am NY time Market is at 1.3914 I will be watching the price action at around the 1.3950 area. It is not a very long term resistance line (only starting on Jan 13) but I will be watching it. The market has not have any strong direction in the London session today.
Edit 12.05pm NY time Market is at 1.3905 The market is still too low for me to be a seller at the current levels.The market has only reached a high of 1.3934, which was too low even for an aggressive Sell trade. I am on the sidelines for the present time.
Edit 7.00pm NY time Market is at 1.3922 The market is still too low for me to be a seller at the current levels.The market has only reached a high of 1.39348, which was too low even for an aggressive Sell trade. I am on the sidelines for the present time...but could change at any time
PS Tomorrows Message will not be a "wordy" as todays... I must have had verbal overflow
Friday, January 1, 2010
MESSAGES FROM JACKO (January 2010)
MESSAGE FROM JACKO 536
It is 3.00am NY time Friday January 28 and the market is at 1.3965
Very little has changed from yesterday. (If you have not read yesterdays Message, please read it).
I am waiting for the retracement to 1.4150 The target sell price of 1.4150 is just 200 pips away. That 200 pips is only a 2-3 days market movement in the current market environment. So I may sit on my hands for a while.
I am not tempted to place a countertrend Buy trade. And the market is too low for me to be a seller at these levels
Edit 8.00am NY time Market at 1.3960 No change in market yet.
Edit 7.00pm NY time Market is closed. (I don't know what happened to my previous 12.10pm Edit..it must have failed to upload).
Market has moved down again the US session. This continuing down move is now making me uncomfortable. I hate missing out on pips in a trending market. I will be looking again at this market again over the weekend and may look at some more aggressive selling strategies with smaller Stop Losses for next week. The market is definitely targeting the 50% fib from 1.2328 (Oct 2008) to 1.5143 (Nov 2009) at 1.3735.
As stated yesterday, even though the market has dropped quickly, We are still in the very early stages of the change in trend. The big issue to remember is that, (as sure as day follows night), this market WILL retrace some of this latest move down, giving us the opportunity to jump back in at a higher price and ride the trend back down.
This down trend has a LOT further to go......!!!!!
Emails
Email 1
I must be overlooking something here, but here goes: The Euro started downhill on or about December 6 2009 on the WEEKLY chart . ( and similar on the DAILY) Yes
It is 3.00am NY time Friday January 28 and the market is at 1.3965
Very little has changed from yesterday. (If you have not read yesterdays Message, please read it).
I am waiting for the retracement to 1.4150 The target sell price of 1.4150 is just 200 pips away. That 200 pips is only a 2-3 days market movement in the current market environment. So I may sit on my hands for a while.
I am not tempted to place a countertrend Buy trade. And the market is too low for me to be a seller at these levels
Edit 8.00am NY time Market at 1.3960 No change in market yet.
Edit 7.00pm NY time Market is closed. (I don't know what happened to my previous 12.10pm Edit..it must have failed to upload).
Market has moved down again the US session. This continuing down move is now making me uncomfortable. I hate missing out on pips in a trending market. I will be looking again at this market again over the weekend and may look at some more aggressive selling strategies with smaller Stop Losses for next week. The market is definitely targeting the 50% fib from 1.2328 (Oct 2008) to 1.5143 (Nov 2009) at 1.3735.
As stated yesterday, even though the market has dropped quickly, We are still in the very early stages of the change in trend. The big issue to remember is that, (as sure as day follows night), this market WILL retrace some of this latest move down, giving us the opportunity to jump back in at a higher price and ride the trend back down.
This down trend has a LOT further to go......!!!!!
Emails
Email 1
I must be overlooking something here, but here goes: The Euro started downhill on or about December 6 2009 on the WEEKLY chart . ( and similar on the DAILY) Yes
If a person was short somewhere near there they would be positive today at plus 839 pips. Yes
What keeps traders from doing this ? Large drawdown's, fear of failure, misguided optimism, or what. Does one need the proverbial "crystal ball" or trustworthy forecasting ( if it exists) I think it is this,... When the market is turning, you need to be able to take the position of trading AGAINST a trend that may have been in place for months.
However, your mindset has been conditioned for months that the market is going UP.
Then it breaks the Daily trend in a down move.
The correct answer is to hit the Sell button (even though your mindset is screaming that the market has been UP for months. And especially when you can NOT see any definite, positive, current reason for the change in the market trend) And.... there is always the doubt that it is not a real break of the trend line and may be just a blip in the trend.
However, your mindset has been conditioned for months that the market is going UP.
Then it breaks the Daily trend in a down move.
The correct answer is to hit the Sell button (even though your mindset is screaming that the market has been UP for months. And especially when you can NOT see any definite, positive, current reason for the change in the market trend) And.... there is always the doubt that it is not a real break of the trend line and may be just a blip in the trend.
Once you miss that small window opportunity to get set at the break of the trend line, you then start to become more cautious not to get hit by a retracement. The market usually moves very quickly on the break of a daily trend line.... So then you miss some more of the move.
You then have three choices...
firstly, jump in and hope that it will be a much longer move in the new direction OR
secondly, wait for the market to come back to the broken Support line for "confirmation" (which does not happen every time.....and when it does... it tends to make you think that it was just a blip in the UP trend and that the market will resume its months old UP movement)
thirdly, look for a counter trend trade on the basis that either it may just be a blip in the UP trend or that it will retrace for the confirmation OR
Fourthly, stand aside and admit to yourself that you missed it and wait for the next set up
The second sentence above is merely my observations of the charts themselves without reading fundamentals, and what EVERYBODY can plainly see. It is plain to see AFTER the fact. The longer the time, the more plainly seen it becomes.
The second sentence above is merely my observations of the charts themselves without reading fundamentals, and what EVERYBODY can plainly see. It is plain to see AFTER the fact. The longer the time, the more plainly seen it becomes.
Do you think this kind of trading is "risky"? It is less "risky" than any other trading method I know, but it also takes courage to hit a market with a big Sell when it has been trending in an UP direction for months.
In my own case, I know that I have been trading much more cautiously (less "risky") now that I am trading other peoples funds and the trading group is copying a lot of my trades. On top of that, we also had to worry about the huge and unforeseen volatility caused by the massive uncertainty of the Great Financial Crisis (GFC).
In my own case, I know that I have been trading much more cautiously (less "risky") now that I am trading other peoples funds and the trading group is copying a lot of my trades. On top of that, we also had to worry about the huge and unforeseen volatility caused by the massive uncertainty of the Great Financial Crisis (GFC).
I am slowly becoming more brave now that the GFC is over, but I can tell you now that I have had some seriously sleepless nights in the last 18 months worrying about how to manage that huge 400% increase in volatility that had the potential to knock out 100 pip Stop Losses with ease.
I was also concerned how MY trading decisions were impacting both the investors in the Fund and the trading group. My biggest fear is that I may cause the investors in the Fund and the traders in the trading group to lose money. Fortunately, the Fund has been performing very well, but we were never 100% sure that I could continue to make profits Quarter after Quarter like we have done.
I always have known that my trading results in 2006-2008 were way above average, but I was truly scared that the GFC had the potential to cause damage to my trading, especially when I was watching the stock market collapsing 50% and the biggest investment banks and insurance companies in the world going bust.
Having said all that, my confidence has surged since the beginning of this year. The break over Christmas and the New Year was a major turning point for me. (I needed a break after the last 18 months ) The market is again feeling very familiar to me. The uncertainty of the GFC is gone and I am becoming much, much more confident that my trading decisions in the next 12 months will be profitable for the Fund, the trading group and myself.
I really appreciate that you " are out there for us...." Thanks...a good email..I enjoyed answering it
MESSAGE FROM JACKO 535
It is 3.00am NY time Thursday January 28 and the market is at 1.4028
I want to open this Message with an apology. We have missed an excellent trade opportunity due to my excessive caution. I should not have closed my original Sell trades at 1.4495 and 1.4425.
As I said in Message 521, I am very optimistic about 2010. My strategy for 2010 is to keep longer trades and will be looking to add to the positions to compound up some profits. This was my strategy in 2006 and 2007 which resulted in some spectacular (!!) profits.
My strategy is to snare a some trades at a good Resistance /congestion area and then let the market downtrend look after the rest.
I have already had one opportunity that I fluffed last week when I closed out the Sells at 1.4495 and 1.4425 (see Message 529). At the current market price (1.4000), I would have been over over 900 pips ( 495 pips and 425pips respectively) better off between the 2 sets of positions if I had not closed them. Thats 900+ pips in less than 10 days. So you can see how easily it is to accumulate large numbers of pips on the longer time frames.
So I apologise for my decision to close those trades. My caution was a result of the last 18 months volatility and unusual trading circumstances brought about by the GFC. It has been difficult (and would have been financially irresponsible) to use the compounding strategy in the last 18 months because of the extreme volatility caused by the GFC and its after-effects. However, I have a completely different feel for 2010 than I did for 2009.
The market is feeling very similar to the 2006 year when I had an exceptionally good year. It was the start of the turn of the trend that lasted for two and a half glorious (and very profitable) years. We are still in the very early stages of the change in trend. The big issue to remember is that, (as sure as day follows night), this market WILL retrace some of this latest move down, giving us the opportunity to jump back in at a higher price and ride the trend back down. This down trend has a LOT further to go......!!!!!
Having said all that, my 1.4150 Sell order remains in place.
Edit 8.00am NY time Market is at 1.4013 I believe that the short term market low may have been made and that the market may move up. If you look at the Hourly chart, the exhaustion spike down to 1.3937 at 8.00pm NY time yesterday is clearly seen. (I don't use the Hourly chart as a rule, but it is the best chart to see today's exhaustion spike)
The downward exhaustion spike is usually a sign that there are no buyers left and selling has reached a climax. (Similarly, an upward exhaustion spike means that there are no sellers left and "at the market" buys rapidly rise as the sellers exit the market).
The exhaustion spike analysis is not infallible, but has a very high percentage correlation with the turnaround in a market.
My 1.4150 Sell order remains in place.
Note...US Core Durable Goods Orders and US Unemployment Claims are both announced at 8.30am this morning
Edit 12.10pm NY time Market is at 1.3975 Market has moved marginally lower. I am now just waiting for a retracement. The market is too low for me to be a seller at these levels. The probability of a reversal (which would take out any Stop Loss) is too high.
Edit 7.00pm NY time Market is at 1.3965 Having missed this downturn by closing out my trades too early, I am now forced to wait for the correction back up. That will give me the opportunity to again sell into this downturn. The target sell price of 1.4150 is less than 200 pips away. That is only a 2-3 days market movement. So I may sit on my hands for a while. I am not tempted to place a countertrend Buy trade. And the market is too low for me to be a seller at these levels
MESSAGE FROM JACKO 534
It is 3.00am NY time Wednesday January 27 and the market is at 1.4058
The market is bouncing off the Support line at 1.4050 and each bounce gets progressively weaker. The Support line will be broken very soon. I am watching to see if London is going to take it up one more time.
Edit 7.00am NY time Market is at 1.4077 (An early warning post) After taking out all the Stop Losses under 1.4050 in the first hour of London trading, the London traders have decided to take the market up one more time.
I have just placed my orders to SELL at 1.4150.
I have been trying to decide whether to go with the tighter 50 pips fixed Stop Loss or stay with the 100 pip fixed Stop Loss on this trade. I have decided to try to tighten up the Stop Losses now that the volatility is reducing in the market place compared to the previous 18 months. My Stop Loss is a fixed 50 pips at 1.4200
I will be back at 8.00am NY time and will send the SMSes as the market gets closer to our target price and our US traders start to wake up.
Edit 8.00am NY time Market is at 1.4080 I am still expecting the market to head back to the congestion area of 1.4150 but have difficulty breaking through it. I have placed my orders to SELL at 1.4150. My Stop Loss is a fixed 50 pips at 1.4200
I will be out at a function for a couple of hours and may not have the opportunity to SMS as the 1.4150 Sell orders are triggered. Will be back at 12.10pm NY time
Edit 12.15pm NY time Market is at 1.4050 Th market not moved much at all this morning. My order stays in place.
Edit 7.00pm NY time Market is at 1.4030 The market disappointed me today. I looking for the the market to move up to the congestion area of 1.4150 to sell into this market. The market moved sideways with a shallow dip caused by the FOMC announcement early the afternoon. The market is now recovering and my 1.4150 Sell order remains in place.
Emails
Email 1
I was wondering do you ever set yearly/monthly trading goals for you to achieve or do you just go with the flow and see what you end up with at the end of the year? I just go with the flow... The days of me being pressured to achieve my business goals is well and truly over. I have been there , done that, and don't want to go there again. My bankers in my previous businesses were always wanting more details to justify giving me more business funds. This forex trading business is sooo different from other "normal" businesses.
Do you ever mentally prepare yourself to get into a winning trading mindset before starting your trading day? Hmmm...not by the day...but I still get a buzz from opening a trade...I am always optimistic that it will be successful...if a trade goes wrong, i still get disappointed..but then I just remember that losses are just part of the business expenses in this business. (instead of enormous staff costs, excessive depreciation, losses from bad debts, obsolete stock, etc, the only real expense in this forex trading business is the occasional loss...). Then I try to get on with looking for the next trade opportunity.
Having said that, last year the Fund (which trades the exact same trades outlined here in the blog) made just on 2000 pips profit per lot for the year. Using a standard contract at USD$10 per pip, that is $20,000 per standard lot. Now the benefit of this business is leverage, so multiply the number of lots you trade and you can see the return. And remember, we are using very conservative risk of only 2% of trading capital on each trade. (Imagine what we could have earned if we increased our risk marginally to 5%)
Also remember that we have just endured the biggest financial crisis in 80 years
My subconscious is telling me that I want to do better, but I am also aware that this year will be a much better year than last because of the better, more stable, economic environment.
MESSAGE FROM JACKO 533
It is 3.00am NY time Tuesday January 26 and the market is at 1.4088
After a very dull US session yesterday and the Australian market being closed today for a National holiday, I expected volume to be thin in the Asian session.
While the volumes were thin (as advised by our brokers) the market has dropped marginally on reports that China's Central bank has increased their banks reserve ratios by 0.5% in an attempt to reduce the high growth in lending. This increased the value of the USD and sent the EUR down marginally.
(What is more amazing is that, if anyone had said just 5 years ago, that a decision of the Chinese Central bank would have had an significant impact on the EUR/USD, they would have been considered a crank and an idiot...) Such is the changing world we live in...
The downtrend is becoming more entrenched. I am looking for a position to short this market in the next 24-48 hours
Edit 8.00am NY time Market is at 1.4083 The downtrend has come down as low as 1.4068 towards the Support line at 1.4050. I am looking for a position to short this market in the next 24-48 hours
It will either bounce upwards from the Support (and I will look to sell it from the higher level of 1.4150+ with a 50pips Stop Loss)....
OR it will break the Support line (and I will look to sell it on the confirmation at 1.4050).
As stated in Message 517,
I believe that the trend has changed and that the market is heading down.... in the longer term.
The first long term SELL target would be the 50% fib from 1.2886 (April 21) and 1.5144 (Nov 23) at 1.4015 (or 1.4000 rounded down).
The second longer term SELL target would be the 50% fib from 1.2460 (March 3) and 1.5144 (Nov 23) at 1.3802.
I still believe that the market is heading down and that these 50% targets are in play.
Edit 12.05pm NY time Market is at 1.4083 The market has bounced off the 1.4050 Support line. I am looking to sell it from a higher level of 1.4150+ . (I am not being seduced into a quick short term opportunistic long this time!!!)
For the adventurous traders. I would expect this market to gradually float back up to the congestion area of 1.4150 in the US afternoon session and stay there for the start of the Asian session
Edit 7.00pm NY time Market is at 1.4080 After reaching as high as 1.4106, the market has retreated. The fact that the market was not able to power up to 1.4150 indicates that any move up is not strong. I am still expecting the market to head back to the congestion area of 1.4150 but have difficulty breaking through it.
I am still keen to sell it from the higher level of 1.4150+ with a 50 pips Stop Loss
MESSAGE FROM JACKO 532
It is 3.00am NY time Monday January 25 and the market is at 1.4150
Last week showed the impact of an impulsive trade. Because I was being more active, I took an impulsive and speculative long trade against the main down trend.
The loss from that trade was not significant (it was a reduced size Stop Loss). However, the impact was that it threw me off the main strategy for the much better short position (that would have been placed if I had not been in the impulsive long trade).
I am looking for a trading position. There is no news events on the calendar today.
I have my charts open to 300 periods of the Daily time frame.
The Resistance line. is found by linking up the highest points on the daily chart starting from 1.5140 (Dec 2) and 1.4579 (Jan 12) , with the resistance line today at 1.4400.
The Support line is found by linking up the lowest points on the Daily chart starting from 1.2460 (March 3) and 1.4029 (Jan 20) you will see that the Support line today was at 1.4050.
With the market currently at 1.4150, we are in no-man's land
Edit 8.00am NY time The market is at 1.4158. We are still sitting in no-mans land, but in the lower end of the range.
Edit 12.10pm NY time Market is at 1.4146 The market has stayed in a tight range this morning. The lack of any news items contributed to the quiet market, but hopefully we might see some movement later today.
Edit 7.00pm NY time Market is at 1.4150 A very dull US session today. The Australian market is closed today for a National holiday, so volume will be thin in Asian session. I will be back for London open.
MESSAGE FROM JACKO 531
It is 3.00am NY time Friday January 22 and the market is at 1.4153
After being beaten down all week, the Euro looks as though it is starting to fight back .
As stated yesterday, it looks as though the 50% Fib line of 1.4015 (actual low is 1.4029.... which is near enough) is the short term low and we are seeing the start of a retracement back up to the 1.4300 mark (50% of the down move from the Jan 13 high of 1.4579 to yesterdays low of 1.4029).
The adventurous traders may want to go long to 1.4300 but use a tight SL. (I would now wait for a pullback to under 1.4150 before buying)
Edit 8.00am NY time Market is at 1.4122 The market has moved back down but is still well clear of the 4.1029 low. Not much was happening in the European session. Lets see what the US morning session brings. There are no news events planned for today.
Edit 12.05pm NY time Market is at1.4152 The market remains directionless today.
Edit 7.00pm NY time Market is closed. This week showed the impact of an impulsive trade. Because I was being more active , I took an impulsive and speculative long trade against the main down trend. The loss from that trade was not significant (it was a reduced size Stop Loss). However, the impact it had on not being prepared for the much better short position (that would have been placed if I had not been in the impulsive long trade) was that it threw me off the main strategy. (Mrs Jackson is still giving me grief about it......LOL)
MESSAGE FROM JACKO 530
It is 3.00am NY time Thursday January 21 and the market is at 1.4088
As stated yesterday, the news out of Europe has been horrible this week for the Euro (first the bad German ZEW numbers and then the very strong rumors that Greece will default). Assuming that there is no further bad news out of Europe, I am expecting the 50% fib on the Daily charts from 1.2886 (April 21) and 1.5144 (Nov 23) at 1.4015 (or rounded to 1.4000) to potentially hold the line and set off a retracement back up.
It is hard to see such deep negative news continuing at the level of intensity seen earlier this week (unless Greece does default, triggering 4-5 other EU country defaults). If that happens, then you can say goodbye to the Euro at anything above 1.2500.
I am going to sit on the sidelines until I can see a clearer resolution to the two differing trade options. The market is still moving down but has stabilized over the last 15 hours. We may have seen the short term low at 1.4068. The 1.4000 - 1.4050 area may be the line that holds.
If it does then the market could initially retrace up to the 1.4300 mark (50% of the move the Jan 13 move from 1.4579 to todays 1.4067).
Edit 8.00am NY time Market is at 1.4073 After touching a low of 1.4029, the market has moved up to its current price. We may be seeing the bounce up off the 50% Fib line. The probability of a bounce up from a major Daily 50% Fib line is more than 50%. I am still on the sidelines watching this action before making a decision.
Edit 12.01pm NY time Market is at 1.4109 Market is being buffeted by the news today (a quick 50 pip drop at 10.00am on the Philly Fed Manufacturing Index and now a quick 80 pip jump on Obamas speech about the banking industry).
Best to stay out until this market stabilizes. But it looks as though the 50% Fib line of 1.4015 is holding. We may see the start of the retracement back up very soon.
Edit 7.00pm NY time Market is at 1.4093 It looks as though the 50% Fib line of 1.4015 is holding. We may see the start of the retracement back up very soon. If it does then the market could initially retrace up to the 1.4300 mark (50% of the Jan 13 move from 1.4579 to todays low of 1.4029).
MESSAGE FROM JACKO 529
It is 3.00am NY time Wednesday January 20 and the market is at 1.4192
I have been getting a very hard time from Mrs Jackson today. She keeps telling me that I knew what the market was going to do...But I tried to be waaay too smart.
She has made me print off the following from Message 517,
I believe that the trend has changed and that the market is heading down.... in the longer term.
The first long term SELL target would be the 50% fib from 1.2886 (April 21) and 1.5144 (Nov 23) at 1.4015 (or 1.4000 rounded down).
The second longer term SELL target would be the 50% fib from 1.2460 (March 3) and 1.5144 (Nov 23) at 1.3802.
And from Message 526 (when I had sold at 1.4495 and the A-H at 1.4425)
I am trying to establish a couple of long term "hold" trades so I am tempted to leave the trades alone.
If I had followed my own strategy and left those 1.4495 and 1.4425 sell trades alone to play out as long term "hold" trades instead of trying to be so smart and trading too actively, I would have been in a much better position this week.
Hmmm.... Head has been smacked .... Lesson reinforced....No more "cowboy" trades.
Now waiting for a retracement so that I can sell back into the downtrend. The broken Daily Support line at 1.4320 has now become the Resistance line.
Edit 8.00am NY time Market is at 1.4143 Market has been dropping. I am still getting a hard time from Mrs Jackson... My head is still getting smacked ... Still waiting for a retracement so that I can sell back into the downtrend.... BUT I am not going to chase this market
Edit 7.00pm NY time Market is at 1.4111 I took some time off today away from the charts to clear my head. There is only one thing worse than a loss trade ... and that is a missed winning trade (especially when we knew what it was going to do...).
The news out of Europe has been horrible this week (first the German ZEW numbers and then the very strong rumors that Greece will default). So I am expecting the 50% fib outlined above to potentially hold the line and set off a retracement
It is hard to see such deep negative news continuing at that level of intensity (unless Greece does default, triggering 4-5 other EU country defaults). If that happens, then you can say goodbye to the Euro at anything above 1.2500
MESSAGE FROM JACKO 528
It is 3.00am NY time Tuesday January 19 and the market is at 1.4408
The market moved very little in the last 24 hours trading, because the US market was closed due to Martin Luther King day and there were no news items.
However, the market is creeping up towards my sell target of the 1.4450- 1.4500 area. I eagerly waiting to sell into this market again at that price area.
I have now placed a SELL order at 1.4490 (Just under 1.4500 Resistance area). I have a 100 pip Fixed Stop Loss on it.
I will send the SMSes later as it gets closer and as Europe and the Americas are more awake. (I try not to wake traders unnecessarily...).
Edit 8.00am NY time Market is at 1.4270 The market has taken a big dump today in European trading on the basis of very poor German ZEW Economic Sentiment numbers. The drop was so unexpected and the reaction so fast that it was not possible to get on the trade unless a trader was on his terminal. Interestingly, the market quickly dropped 60+pips immediately BEFORE the numbers were released. It then quickly dropped another 80 pips immediately after the numbers were released
However, the US session is the first sesssion back after the Martin Luther King long weekend and that may reverse some or most of the move down.
But this fast move down (lack of buyer support !!) also confirms that the long term trend down is gaining strength.
Edit 8.25am NY time Market is at 1.4290 The fall in the European session may have been overdone. I missed the drop in the Euro session but I believe that the US session will reverse some (or most) of this drop. I am taking a countertrend BUY trade at 1.4300 or less.
Edit 8.28 am NY time I have just bought at 1.4290 IMPORTANT I have a 50pip Stop Loss at 1.4240 This is a risky countertrend trade and I am not prepared to risk more than 50 pips
Edit 8.42m NY time Market has dropped back to as low as 1.4285 at 8.38am allowing everyone to get set on this trade. Because this is a risky countertrend trade, I am setting an initial Target Price of only 1.4400
Edit 12.10pm NY time Market is at 1.4270 The market has been as low as 1.4252. I am letting this trade play itself out.
Edit 7.00pm NY time Market is at 1.4277 My counter trend trade has not been doing much. After going as low as 1.4252, it has moved up marginally. I was expecting a bigger reversal during the US session, but it may happen now in Asian trading. On the Daily chart we are in the bottom of the range for the last 21 trading days (since Dec 17). It will either retrace up (good for my trade) or try to break the lows of the last 21 days (in which case I will be stopped out for 50 pips).
I am expecting the reversal in Asian trading
Edit 9.00pm NY time The market has had a quick and abrupt drop of 100 pips on news of a large problem with fiscal problems in Greece and the potential impact on the European Union. My Stop loss was hit at 1.4240 at 8.18pm for a 50pip loss.
MESSAGE FROM JACKO 527
It is 3.00am NY time Monday January 18 and the market is at 1.4381
After closing my last two trades for a good 150 pip profit, I am now hoping that the market will retrace up higher so that I can re sell this week at a higher entry price. I still believe that the longer term trend is a down move. If this market retraces to the 1.4450- 14500 area in the next 12-24 hours, I will be a definite Seller.
Even though 2009 was a solidly profitable year with strong results, the returns were much smaller than in previous years. However, I believe that 2010 will be much more similar to 2006 and 2007 where the returns were significantly higher.
The awful effects of the Great Financial Crisis(the huge volatility, the uncertainty, the fear, the illiquidity) over the last 18 months has started to disappear. Traders are already beginning to forget that for the last 18 months we were on the precipice of the most dangerous meltdown of the worlds financial system in the last 80 years (or the last two generations) since the Great Depression of 1930's. I can feel the confidence coming back into the market and also in my own trading since the start of this year.
I am prepared for some aggressive trading this year. I will be maintaining my risk level at 2% of the account but will be looking for more opportunities now that the volatility has fallen to its long term average.
I have my charts open to 300 periods of the Daily time frame.
The Resistance line. is found by linking up the highest points on the daily chart starting from 1.5140 (Dec 2) and 1.4579 (Jan 12) and 1.4555 (Jan 13) , with the resistance line today at just above 1.4500.
The Support line is found by linking up the lowest points on the Daily chart starting from 1.2460 (March 3) and 1.4264 (Jan 7) you will see that the Support line today was at 1.4320.
The 50% Fib line The market appears to be struggling to break up to the 1.4700 mark which is the 50% fib from 1.5140 (Dec 3) to 1.4217 (Dec 21) at 1.4679 (or 1.4700 rounded).
NOTE The US market will be closed today in observance of Martin Luther King day.
Edit 8.00am NY time Market is at 1.4375 The market has moved very little in European trading, perhaps in recognition that the US market is closed today due to Martin Luther King day and that there is no news items today.
Edit 12.05pm NY time Market is at 1.4389 The market is very quiet in thin holiday trading.
Edit 7.00pm NY time Market is at 1.4404 The market is creeping up towards my sell target of the 1.4450- 1.4500 area. I eagerly waiting to sell into this market again at that price area.
MESSAGE FROM JACKO 526
It is 3.00am NY time Friday January 15 and the market is at 1.4412
My two trades are doing well. My first sell at 1.4495 is now in profit with a SL at breakeven. My second sell is my A-H trade sell at 1.4425 is only marginally in profit. Its SL is set at the same prce as the first trade at 1.4495.
I am letting the trades play themselves out for a little longer. My initial target was 1.4325 which allows the A-H fallen soldier to redeem himself. I am trying to establish a couple of long term "hold" trades so I am tempted to leave the trades alone. However, the market may try to retrace in the London session so I am watching closely for any signs of a major retrace and will jump out and Sell again later
I have a buy order to close out the trades at 1.4325 in place at the present time
(If I am lucky enough to be closed out at that price I will then wait for a retracement to get back in again later with a sell at a higher price)
Edit 7.23am NY time Market is at 1.4384. As you know, the market often reverses the move from one session to the next. I think that the US session may reverse the Euro session down move. I think that the US market may take the Euro up today. I have just closed all my trades at 1.4385. Will sell again next week.
Profit from Trade one is 110 pips. Profit from the A-H trade is 40 pips. Total 150 pips
Edit 8.00am NY time Market is at 1.4381 The market has moved marginally lower. The big market players have been returning to work this week with a significant and noticeable increase in volume today compared to earlier this week and it is vastly different from the previous weeks Christmas and New Year vacation period.
As I said in Message 517, I believe that the trend has changed and that the market is heading down.... in the longer term.
The first long term SELL target would be the 50% fib from 1.2886 (April 21) and 1.5144 ((Nov 23) at 1.4015 (or 1.4000 rounded down).
The second longer term SELL target would be the 50% fib from 1.2460 (March 3) and 1.5144 (Nov 23) at 1.3802.
As I said in Message 521, I am very optimistic about 2010. I am hoping to keep longer trades and will be looking to add to the positions to compound up some profits. This was my strategy in 2006 and 2007 which resulted in some spectacular (!!) profits. It has been difficult (and would have been financially irresponsible) to use the compounding strategy in the last 18 months because of the extreme volatility caused by the GFC and its after-effects. However, I have a completely different feel for 2010 than I did for 2009.
The market is feeling very similar to the 2006 year when I had an exceptionally good year. It was the start of the turn of the trend that lasted for two and a half glorious (and very profitable) years. After the turmoil and insane volatility during the 15 months of the GFC, I am soooo ready for this years trading.
Edit 12.15pm NY time Market is at 1.4381 After closing my two trades for a good profit, I am now hoping that the market will retrace up higher so that I can re sell next week at a higher entry price. I still believe that the longer term trend is a down move.
MESSAGE FROM JACKO 525
It is 3.00am NY time Thursday January 14 and the market is at 1.4537
In the last hour, the market has again tested the upper limits of the 1.4500 (plus or minus 50 pip) range that has been in place most if this week. The market may still be trying to get to that 50% fib from 1.5140 (Dec 3) to 1.4217 (Dec 21) at 1.4679. IF London tries to take it up again, it may get there this time.
I am still looking for another trade opportunity and may put the A-H trade on the back burner until the market gets back down closer.
I am interested in placing my trade in the US session today as there is an ECB Interest Rate Statement, US Core Retail Sales and US Unemployment Claims, all being released at 8.30am NY time today. I am looking to trade after the news is all out.
However, I am also watching the London session for any opportunity.
Edit 8.00am NY time Market is at 1.4490 . My A-H order to sell at 1.4425 is still in place and waiting to be activated.
Edit 12.05pm NY time Market is at 1.4478 The market is continuing to stay in this 1.4500 (plus or minus 50 pips) area. The market seems becalmed with no clear direction at the present time. My A-H order to sell at 1.4425 is still in place and waiting to be activated.
A very dull market so far this week.
Edit 7.00pm NY time Market is at 1.4500 The market is continuing to stay in this 1.4500 (plus or minus 50 pips) area. Actually, it has spent 95% of this week in the 1.4475 - 1.4550 range which is even tighter. A very dull market.
Edit 7.25pm NY time Market is at 1.4494 I have been looking at the 4H charts and it appears that it may be rolling over in the short term. I have decided to take a quick speculative trade. I will be a seller at around the 1.4500 area
Edit 7.35pm NY time I have just SOLD at 1.4495 I have a 100 pip hard Stop Loss on this trade.
My A-H trade order is still in place. If it gets picked up I will be in at double risk load
Edit 11.25pm NY time Market is at 1.4430 I have been having a nap. My A-H trade was picked up some 2.5 hours ago (at 9.20pm NY time). I now have two trades running (1.4495 and the A-H at 1.4425). So I am running at 4% risk for the combined trades.
I have now moved my SL to 1.4495 for both trades, so the first trade is at Break Even and the A-H trade has a maximum exposure of (currently) 70 pips
I am letting the trades play themselves out for a little longer. My initial target is 1.4325 which allows the A-H fallen soldier to redeem himself.
Emails
Email 1
You currently have a A-H trade in place, however as you've stated it looks like the market is trying to retrace to the 50% fib at around 14700. If the market was to hit this level would you:
a) consider placing a trade here and remove the A-H or,
b) consider placing a trade and keep the A-H trade in place for when the market falls again, This (b) is the preferred option
c) wait for it to fall again and pick up the A-H trade?
Email 2
As a noob I've been a bit confused about how you have been determining that the market is in a down trend long term. See the break of the Daily Support line on Dec 3
Firstly, can it be as simple as that once the trend has turned the direction is set for some time? That doesn't seem likely to me. Yes, it sets a change in sentiment in traders, investors and then policy makers. The markets sentiment and expectations are the main drivers of market price
Secondly, I've been drawing support lines on the daily chart from Mar4 to Dec4, 2009 where I can see the support was breached. Yes
Then follows an obvious trend reversal to downwards up until about Dec22 where things kind of went sideways until the NFP numbers. If I am only looking at the chart how can I determine that the trend is still downward? We are waiting for the second top to be put in place, probably around the 1.4650- 1.4700 area. Then we will have a very strong Resistance line (linking the Dec 3 high and the new high at 1.4650-1.4700) and that will be the major trend line for the next 12 months
Email 3
I'm guessing that you may not be positive about this but I'd like your opinion on something like ( trade testing software package). Can it be beneficial to only practice on historical charts sans the benefit of fundamentals? Or is it enough to just work from MT4's own historical data? I don't have a problem with testing, but these packages will draw you deeper and deeper into a vast array of "indicators"...... Beware. Indicators don't work!
The markets strongest influence is "expectation". That is why S&R lines, 50% fibs and, to a lesser degree, Round Numbers are so important. So many of the big players use only those rules on long time frames that the "expectation" of where it will go becomes almost self fulfilling.
Also, may I ask what your process of approaching the market is of a morning? Your thought processes on the blog are invaluable but I find that I need some really basic direction as to how I should approach the market. A methodology. I realize after a couple of burns before joining you that the worst thing I can do is to first thing in the morning open MT4 and get sucked into a trade. It is very rare that a trade will just jump up at you from out of nowhere (especially when you first open your platform). Your trades should be developments of market action from the previous days
So, what can I do to help me slow down? Besides just committing to following your own trades and analysis? Or is it really just that simple? Define the direction of the trend and be patient? Yes !!!! Warren Buffett is the second richest man on the planet and he trades maybe 5-10 times a year. (He has always been a long term trader) Yet every new, young stock trader believes that they need to be a frantic daytrader to make money...Go figure???
MESSAGE FROM JACKO 524
It is 3.00am NY time Wednesday January 13 and the market is at 1.4488
The market is continuing to stay in this 1.4500 (plus or minus 50 pips) area. The market seems becalmed with no clear direction at the present time.
My A-H order to sell at 1.4425 is still in place and waiting to be activated.
A very dull market so far this week. There is not even a decent sized news event on the forex calendar. However, the market is rarely becalmed like this for too long.
Edit 8.00am NY time Market is at 1.4563 In the last hour, the market has been testing the upper limits of the 1.4500 (plus or minus 50 pip) range that has been in place all week. It may be that the NFP on Friday has triggered a stronger and longer correction upwards than expected. The market may be trying to get to that 50% fib from 1.5140 (Dec 3) to 1.4217 (Dec 21) at 1.4679.
Edit 12.05pm NY time Market is at 1.4491 The market attempt to break out above 1.4550 was, as I thought, both tentative and unconvincing.
The break out was less than 30 pips in size. And it has fallen straight back to the 1.4500 (plus or minus 50 pip) area. But the market has much more volume today.
Speaking with our brokers, they advise us that all the big market players have been returning to work this week with a significant and noticeable increase in volume today over the last two days. Prior to this week, it was very, very thin Christmas and New Year holiday volumes.
Edit 7.00pm NY time Market is at 1.4523 The market has reverted back into its 1.4500 (plus or minus 50 pip) area. My A-H order to sell at 1.4425 is still in place and waiting to be activated.
I am starting to look for another trade opportunity and put the A-H trade on the back burner, until later
Emails
There are a small number of outstanding emails from the last two days which I will respond to after the US trading session today (and I have had a nap).
In my defense, this week we have been receiving Brokerage Presentations from our various Brokers on their Outlooks for 2010, which are very comprehensive and detailed, but leave me wondering how they believe that they can analyse it so deeply. My limit of the view of the EUR/USD is that I personally believe that the EUR/USD is going to fall significantly this year. The brokers are so far equally split. One has a higher EUR/USD projection and one has a lower EUR/USD projection. We have another presentation this afternoon (US time) so I will be interested to see what they project.
Also, my Office Manager (Sally) and her Admin Assistant returned from their annual Christmas /New Year break today so the office is back at full strength. (Thank God... because I hate all the paperwork).
Thankfully, the vacation period is now over and we can all get back to work.
MESSAGE FROM JACKO 523
It is 3.00am NY time Tuesday January 12 and the market is at 1.4512
The market is continuing to stay in this 1.4500 (plus or minus 50 pips) area. However, as I stated yesterday, the impact of the NFP rarely lasts more than two or three days so I expect to see the market resume its downward trend very soon.
My A-H order to sell at 1.4425 is still in place and waiting to be activated. Until then, I am on the sidelines. (I am NOT a seller at the current higher levels than the A-H trade because I want proof that the downtrend is back in place. That is why the A-H trade stays at 1.4425. It will get activated only if the downtrend is back in place).
Edit 8.00am NY time Market is at 1.4499 My A-H order to sell at 1.4425 is still in place and waiting to be activated. Until then, I am on the sidelines.
Edit 12.10pm NY time Market is at 1.4522 The market is continuing to stay in this 1.4500 (plus or minus 50 pips) area. The market seems becalmed with no clear direction at the present time.
Edit 7.00pm NY time Market is at 1.4475 This is a real test of patience. It is also a good example of how a market can basically meander around a set number (in this case 1.4500) for an extended period of time
Emails
Email 1
I just had a question regarding the last trade. I have a hard time to see what will happen to the market as it approaches the support. The market does not like Support and Resistance lines. Most of the time they will quickly bounce away from them .
IF a market hangs around a Support or Resistance line, it will usually break it. In this case the market moved down to the Support line in readiness for the NFP announcement. I think that the market was fully expecting the NFP numbers to be very small (and was ready to break down through the line quickly) and got a big shock when the actual numbers came out (and so bounced it back up )
Like everyone else, I was expecting the NFP numbers to be much smaller than they were.
IF that had happened we would have seen a 150 pip move down. (The NFP and also the FOMC announcement has the power to change the whole sentiment of the market for a couple of days). I was in profit, so I decided to take the trade and use the markets money As it turned out, it was the wrong decision
MESSAGE FROM JACKO 522
It is 3.00am NY time Monday January 11 and the market is a 1.4491
The market has moved up in Asian trading as the impact of the disappointing NFP numbers from Friday continues to resonate through the market. However, the impact of the NFP rarely lasts more than two or three days so I expect to see the market resume its downward trend very soon.
My last trade was stopped out at 1.4425. The market has moved 50 pips past my SL on the last trade at 1.4425. The market has moved higher than 1.4475 (which is 50 pips past the SL) so my AH trade has now been placed.
I have an A-H SELL order at 1.4425. When the market starts to resume the downtrend, it will trigger the order at 1.4425 and we will start to recoup our losses on the last trade.
The adventurous traders I am very confident that this market has NOT changed the trend and is still in a downtrend. The move up from the NFP will possibly prove to be a short term over-reaction. Adventurous traders may want to SELL from a higher level that 1.4425...I would suggest anything above 1.4475 is a good opportunity
Edit 8.00am NY time Market is at 1.4523 My A-H order to sell at 1.4425 is still in place and waiting to be activated. Until then, I am on the sidelines.
Edit 12.10pm NY time Market at 1.4538 I am still on the sidelines. The market is trying to move to the 50% fib from 1.5140 (Dec 3) to 1.4217 (Dec 21) at 1.4679
Edit 7.00pm NY time Market is at 1.4508. The US session was a very dull session today. My A-H order to sell at 1.4425 is still in place and waiting to be activated. Until then, I am on the sidelines.
The adventurous traders I am very confident that this market has NOT changed the trend and is still in a downtrend. The move up from the NFP will possibly prove to be a short term over-reaction. Adventurous traders may want to SELL from a higher level than my A-H trade level 1.4425...I would suggest anything above 1.4475 is a good opportunity. I know that all of you got set at 1.4500- 1.4550. (The market has not been below 1.4500 since I posted the originalrecommendation)
MESSAGE FROM JACKO 521
It is 3.00am NY time Friday January 8 and the market is a 1.4325.
After closing my 1.4400 SELL trade yesterday at 1.4310 for a 90 pip profit, I watched the market bounce back up. (Remember, that was my trade with the award winning worst entry, so everyone else should have easily made more pips than me)
My second trade was when I decided to sell again two hours later. My sell at 1.4325 is progressing well. It has a fixed Stop Loss at 1.4425.
NOTE Today is NFP day. The NFP numbers are the biggest market movers on the Forex calendar. Unless I am satisfied with the progress of the market prior to the announcement, I may consider closing the trade and re-opening it after the NFP announcement
As discussed in Message 517, I believe that the trend has changed and that the market is heading down.... in the longer term.
The first long term SELL target would be the 50% fib from 1.2886 (April 21) and 1.5144 ((Nov 23) at 1.4015 (or 1.4000 rounded down).
The second longer term SELL target would be the 50% fib from 1.2460 (March 3) and 1.5144 (Nov 23) at 1.3802.
I am hoping to keep this trade and will be looking to add to the positions to compound up some profits. This was my strategy in 2006 and 2007 which resulted in some spectacular (!!) profits. It has been difficult (and would have been financially irresponsible) to use the compounding strategy in the last 18 months because of the extreme volatility caused by the GFC and its after-effects. However, I have a completely different feel for 2010 than I did for 2009.
While 2009 was a very successful year, given the GFC and the aftermaths of that on the banks and stock market, I am very optimistic about 2010. The market is feeling very similar to the 2006 year when I had an exceptionally good year. It was the start of the turn of the trend that lasted for two and a half glorious (and very profitable) years. After the turmoil and insane volatility during the 15 months of the GFC, I am soooo ready for this years trading.
On a more sombre note, members of this trading group will know that I have allowed each of you to view the progress of the Jackson Fortress Fund in the Jackson Fortress Funds blog site. We are very proud of our Fund. It has shown excellent returns over the 18 months that it has been operating. During the time of the GFC, we continued to deliver substantial profits (both in dollar terms and percentage terms) every Quarter. The Fund has never had a negative Quarter and has been performing well above industry average. The current Quarter is also on track to be profitable. We know of no other Fund that allows its investors to see the live trades for every trade it takes. As you know, I am NOT a signal seller, the trade calls I send to you are the exact same trades that I place for the Fund and my own personal account.
I gave everyone free and unfettered access to show the workings of a true working Managed Fund, using a special User ID and Password.
Unfortunately one or two misguided members of this group have given the User ID and the Password to non-members of the group. They, in turn, have used selective parts and selective trades on that blog to criticize me, and our Funds performance, on forums.
I don't wish to spend my time countering statements by immature posters hiding behind the anonymity of the internet on various Forums. I have therefore deleted the compromised special User ID and Password and will be restricting the blog site only to the investors for the present time.
Needless to say I am disappointed that I have had to do that, because it was an excellent way for you to see the summary of all our trades here, but Mrs Jackson will not allow our personal names and the Fund to be openly denigrated on the internet.
I have therefore temporarily restricted access to the Funds blog to only the investors at the present time.
Edit 8.00am NY time The market is at 1.4289 As expected the market has moved to the Support line area for the critical NFP announcement. (This is usual... The NFP announcement will decide whether the market bounces up again in a retracement OR breaks down in a continuation of the cuurrent down trend) I am in profit in my latest sell trade at 1.4325 so I have decided to use that profit cushion to stay in the market during the NFP announcement. My Stop Loss is still at 1.4425.
Edit 12.10pm NY time The market is at 1.4370 The market had its usual large reaction to the NFP numbers. Unfortunately, it was not in out favor. The market rose dangerously close to our Stop Loss at 1.4425 when it rose as high as 1.4414 before falling back. I am letting this trade play itself out some more.
Edit 6.00pm NY time The market is closed. The NFP had its usual large erratic moves again today. After shooting UP 143 pips (1.4272-1.4415), it then dropped DOWN 115 pips (1.4415- 1.4300) then again shot back UP 138 pips (1.4300 - 1.4438). And that was before before lunch !!
The impact of that last move up was that our Stop Loss was triggered. I am now waiting for the A-H trade to be activated. I believe that the NFP was a typical over-reaction and that the market will continue its downtrend next week. For the A-H to be activated, the market needs to move up to 1.4475 or higher, which will then set a SELL order where we were stopped out at 1.4425. As the market moves back down, we will recover all of our losses from the last trade.
Emails
Email 1
Why did you close the first short trade (from 1.4400 to 1.4310), only to re-open the trade 2 hours later at 1.4325. I actually see the two trades as being the same trade. That is, a SELL from 1.4400. However, when a market gets close to a Support or Resistance line, if you think that the market is getting close to a breakdown, sometimes you can close the trade and then wait for any bounce to get back into the trade at a better price and pick up some extra pips. In this case, I was reasonably certain that the market is trending down, and had bounced off the Support enough times, and was heading for a possible break down of 1.4300, so I closed out the first trade to lock in profits. But, in case the market bounced up marginally, I saw it as an opportunity to get back into the down trend at a better price (1.4325 vs my exit at 1.4310). That is what I did
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