MESSAGE FROM JACKO 636
It is 3.00 am NY time Wednesday June 30 and the market is at 1.2236
The market is moving back up after the US stock market took a beating yesterday, which flowed on the a "flight to safety" of the USD. Some of those positions are being unwound in pre-London trade. The market is now moving back up towards the Resistance line areas again. This market can easily move back into my Sell zone. My Sell orders at 1.2400 are still in place and I am waiting for them to be triggered.
Edit 8.00am NY time Market is at 1.2270 The market is continuing to gradually move up into my Sell zone of 1.2400 (it has moved down marginally to approximately 1.2350 because of the downward sloping nature of the Resistance line).
Edit 12.05pm NY time Market is at 1.2291 The market is getting closer to my Sell price at 1.2400 (The 4H Resistance line has moved down marginally to just above 1.2350 because of the downward sloping nature of the Resistance line, but I have left my orders at 1.2400 to give me a small additional margin for "noise"). The more adventurous traders may want to place their Sell trades at 1.2350.
Edit 8.00pm NY time Market is at 1.2228 The market has drifted back down again. There is a distinct lack of direction in the market at the present time as it absorbs the fact that the US is doing almost as poorly as the Euro zone.
MESSAGE FROM JACKO 635
It is 3.00 am NY time Tuesday June 29 and the market is at 1.2235
The market has moved down marginally to the lower levels of the 250 pip range (1.2450 to 1.2200) that it has been in for the last two weeks, since June 15. The market was disappointed with the lack of decisions and results of the G20 meeting. The European Governments have continued their twin policies of "extend and pretend" that it is not a serious issue, and "delay and pray" that it won't all blow up in their term of office.
However the slowdown in the US economy as shown by the unemployment numbers and the record low new housing starts has also taken away the hope that the US consumer will drive the world economy in the near future. In addition, the Government and Central banks are starting to realize that the massive Trillion dollar (Quantitative Easing) injection of funds into the US economy has failed to lift the economy in the medium to long term. Similarly, the equally ambitious Quantitative Easing measures in almost every other country has had the same lack of medium to long term stimulus.
Also the 800 Billion Euro "safety" Fund for the defaulting European economies is turning out to be a non-event because Germany (rightfully) won't fully commit to accepting the responsibility for the PIIGs spending sprees of the last 20 years.
Finally, we are at almost zero interest rates, so the potential to stimulate the economy by lowering interest rates is no longer available either. The Zero Interest Rate Policy (ZIRP) is not working. They have tried that policy in Japan for the last 10 years and it never worked there either.
We are heading slowly into deflation territory.
My Sell orders at 1.2400 are still in place and I am waiting for them to be triggered.
Edit 8.00am NY time Market is at 1.2200. The market had dropped lower in European trading earlier this morning and has now been sitting at these levels for the last three hours. I am not happy. I wanted to get into this market yesterday, but the market did not pullback far enough. I am not going to chase the market down. My orders are still in place.
Edit 12.05pm NY time Market is at 1.2184 There have been some terrible US Consumer Confidence numbers released earlier today that have caused a big "flight to safety" from stocks to Treasuries. (US stocks are down over 2% today) This has also affected the USD as there has been a similar, but smaller, flight to safety to the USD. The market is lower than where I wanted it to be, but my orders are still in place. As stated above, I am not chasing the market down. In days like the last two weeks, the market can easily move back up into the Sell zone.
Edit 8.00pm NY time Market is at 1.2186 The market is at the same level to where it was in the previous entry 8 hours ago. The stock market took a beating earlier today which had a flow-on effect in the flight to safety of the USD.
MESSAGE FROM JACKO 634
It is 3.00 am NY time Monday June 28 and the market is at 1.2365
The G20 has been disappointing with very little reaction, primarily because they have agreed to very little. The main decision has been to halve the deficits by 2013. I am seriously interested in selling into this market in the next 24 -48 hours.
Edit 8.00am NY time Market is at 1.2347 The market has been restrained at the 4H trend line area. we are still some distance from the Daily Resistance line. On a technical basis, the Daily Resistance line on the 300 daily Chart ( starting at 1.5140 on Dec 2, 2009 and touching 1.3679 on April 13) is now currently at approx 1.2900.
However, if we drop down to the 300 bar 4H charts (starting at 1.3679 on April 13 and touching 1.3360 on May 2), the Resistance line is now currently at approximately 1.2400. (just above where it is now) ....I have decided to take a trade on the "riskier" 4H time frame. I have a Sell order at 1.2400 with a 100 pip Stop Loss. SMSes will be sent out in the next 15 minutes
Edit 12.01pm NY time Market is at 1.2316 The market has moved down approximately 30 pips in early NY trading but I am confident that we will have a small retracement to the 1.2400 area. My orders are in place, and I expect another retracement/ pullback move up towards 1.2400.
Edit 8.00pm NY time Market is at 1.2287 My Sell orders at 1.2400 are still in place and I am waiting for them to be triggered soon.
This is a "heads-up" notice. I have received a couple of emails from a young-ish guy. The first email was received six weeks ago from him saying that he wanted to join the group but had no money and requested that he pay the fee over 12 months. I responded that NO-ONE has received any different consideration from any other member because that would not be fair on the other members. I then received a second email a month ago from the same guy explaining that his life was not turning out as expected and that life had been unfair to him and that he wanted a "loan" from me to help him out. I again responded that, as much as I would like to help deserving cases, I did not know him at all. I have just received a third email from him (which was full of swearing and ranting about how rich people should help young and poor people) and demanding that I agree to pay him $50k into his bank account and another $25k into his trading account or he will "destroy" me in all the forums. I am not concerned about his threats. But I am not prepared to agree in writing to his terms just so that I can get name and details. (He has not forwarded any of his details to date. He is waiting for me to agree to his terms before forwarding them). I will keep you up to date, just in case you see anything in the forums.
MESSAGE FROM JACKO 633
It is 3.00 am NY time Friday June 25 and the market is at 1.2340
The market is thinning out as the bigger traders close their books for the G8 meeting today and the G20 meeting on the weekend. I certainly do not want to be caught in a trade over the weekend. There will be a high probability of a gap over the weekend. I will wait for the outcome of the talks. The likelihood of false bravado by the European leaders about the strength of their economies is very high. (Remember, there will be the 20 leading politicians from around the world and their finance ministers...... and every one of them will be moving their lips).
Edit 8.00am NY time Market is at 1.2310 The market has moved down in European trading as the market tries to balance the new woes of the US (poor employment numbers and record low new housing starts) against the ongoing woes of Europe. At the present time, the balance has moved marginally towards the US though the weekend G8 and G20 meetings may (?!) give the Euro a boost.
Edit 12.01pm NY time Market is at 1.2331 The market is very thin now with many traders closing their orders in the last 30 minutes, heading off to lunch, and leaving it to the G20 politicians and their meetings over the weekend. I will be monitoring the announcements out of Toronto over the weekend to see what the Govt leaders are thinking.
Emails
Email 1
I was analyzing opportunities and threats for the future of the FOREX market. For example: will this market also trend so much in the future? Yes Will the market always have good S/R? Yes, as the markets become more popular, the S/R lines will become stronger because they will become more self perpetuating to more people Will there always be different currencies to trade? Yes ...You only ever need one pair anyway. Will there always be a free market? I think so And will there always be leverage in the future? Of course...the world is driven by credit (another word for leverage) I know that the American CFTC wants leverage back to 10:1 to protect (stupid) traders. There will always be other countries that will not demand that small amount of leverage and so the traders will move their accounts to there
So my main question: I know traders should always be innovative, but do you think that your trading methodology will still work in let's say 20 years? Yes. And do you see other threats for the future of the FOREX market especially for small (retail) traders? I think that it will get better... The markets have been opened up to individual traders in a way that we would have only have dreamed about 20 years ago
Email 2
It seems the you and everyone else is expecting the euro at 1.1 or parity. Yes If so, why hasn't it just plummeted? It is the nature of trading that the market often does not get to its destination in a direct line. It tends to move in a direction and as it becomes more extended, the novice/weaker/ less financial/ emotional traders get in and the insto traders also start taking some speculative trades (but with smaller risk levels/ smaller stops). As the market starts to slow, some of those trades are either stopped out by the "noise" of the market or by "fear" of a loss. That moves the market slightly in the reverse direction, setting of the next level of stop losses.. Who is buying the euro right now? Those weaker traders who are covering their short trades why would they stop buying the euro and allow it to drop further at this point, won't they lose a lot of money from their current euro purchases? No, they are not opening new positions (in most cases). They are simply closing out their previous Sell positions
Email 3
As I have been following your perspective of forex trading, I have notice that you have set a lot of focus on entry, stop loss and anti-hedging strategy. But I would like to learn more about your views on the strategy of taking profit. My original strategy was built on the Trailing Stop loss as an exit strategy...but the huge increase in volatility during the Financial Crisis of late 2008 and all of 2009 made a 50 pip (and even a 100 pip) TSL redundant. I was not prepared to go to bigger TSLs so what I moved to was an initial fixed 100 pips SL which I then move down progressively. When a move down has become "extended" or near a Support or Resistance line, I will simply close it I have went through your blog, you have mention that you don't believe in setting a target as you want to let the profit run. Correct You used to mention about using trailing stops, but I didn't see you have been using it in the last few months.Will you be developing a strategy for taking profit, or you will just solely be using trailing stop? I am seriously considering reverting to the 100 pip TSL as it is now the only part of the original strategy that I am not using (and I want to get back to the original strategy )
MESSAGE FROM JACKO 632
It is 3.00 am NY time Thursday June 24 and the market is at 1.2320
The combined effects from the US New Housing starts and the FOMC Statement has sent the Euro up as high as 1.2351. We now have a situation where both the US economy and the EU economy are both showing signs of much slower growth than previously expected. I am still waiting for the market to move closer to the 4H Resistance line.Edit 8.00am NY time Market is at 1.2280 The market has been sagging in European trading and s moving away from my Resistance line on the 4H charts. At its closest point it was around 49 pips (1.2400 - 1.2351) from my target of 1.2400, so it was close...but not close enough. I will be waiting for it to get closer again soon.
Edit 12.05pm NY time Market is at 1.2384 The market has been spiking up in the last hour or two. It seems that with the terrible US jobs numbers and the record low US new housing starts this week, what we thought was the light at the end of the tunnel appears to be an runaway economic freight train heading towards the USD. I am still a Seller at the 1.2400 area but I want to watch to see if this goes beyond it to see if I can get a better price. I am looking at this trade as a more risky trade because I am looking at the 4H Resistance line, rather than the Daily Resistance line, so I am not racing into this trade. I will be watching this market all afternoon to see where this spike is going.
Edit 8.00pm NY time Market is at 1.2336 The market has fallen back without having reached 1.2400. (The market has again shown that it will often retrace after 12.05pm a previous move.) As stated above, I am still a Seller at the 1.2400 area but I want to watch to see if this goes beyond it to see if I can get a better price. I am looking at this trade as a more risky trade because I am looking at the 4H Resistance line, rather than the Daily Resistance line, so I am not racing into this trade. We have a G8 Meeting starting today in Toronto Canada, followed by a G20 meeting on the weekend. I certainly do not want to be in a trade over the weekend. There will be a high probability of a gap over the weekend.
MESSAGE FROM JACKO 631
It is 3.00 am NY time Wednesday June 23 and the market is at 1.2278
Since bouncing down off the 4H Resistance line, the market has gone into a lull and has stayed there in Asian trade. The market is drifting at the present time but the Euro is showing some strength in pre London trading. I am hoping for a minor kick up to the 1.2400 area (the 4H Resistance line) so that I can Sell into this market. The FOMC Statement today may be a catalyst for a big move up in the USD (and down for the Euro) and I would like to get in for that move.
The FOMC Statement on interest rates and the US Non Farm Payroll (NFP) announcement are the two biggest market movers on the Forex calendar. In the last two months they have been overshadowed by the Greek crisis and the frailty of the Euro, but I believe that today's FOMC Statement will be more positive on the US economy than expected. However, I am only interested in Selling if I can get a good pullback to minimize my risk of being whipsawed if the news is not as positive as I expect.
Edit 8.00am NY time Market is at 1.2268 The market has remained reasonably steady in European trading... Not what I wanted to see. The insto traders are waiting for the release of the FOMC Statement to get an idea of where the US economy is and where it is heading in the near future. I was hoping that we would see a minor bounce up to the 1.2400 area. I am waiting for the market to move back up towards the 4H Resistance line which is today at approximately 1.2400. Depending on where the market goes in the next 12 hours, I may be a Seller at 1.2400 area.
Edit 12.05pm NY time The market is at 1.2235. The US New Home Sales result was a shocker... and the market clearly had not read that into the equation by the time of the news release at 10.00am NY time. The plunge of 33% was a result of the expiry of the tax credit, but it also shows that all is not well with the confidence of people in the security of the jobs market. However, we have the FOMC Statement in just over 2 hours..... PLUS....... We just won the soccer game against Algeria (Here in Hong Kong soccer is enormously popular and I have been in a bar with some great friends having a great night....even though our team left it to the 2nd last minute to win the game...A great win for the USA).
Edit 8.00pm NY time Market is at 1.2307 The market has spiked up as high as 1.2343 after the FOMC Statement which was getting close to my target area of 1.2400...but it was not high enough. I am still waiting for the next move up...
MESSAGE FROM JACKO 630
It is 3.00 am NY time Tuesday June 22 and the market is at 1.2308
The market has continued to drift down in Asian trading on the news of China considering a revaluation of the Yen (its just talk...its so they can go to the G20 meeting saying that they are doing something). Also the impending FOMC announcement tomorrow at 2.15pm NY time is weighing on the market in the expectation that the Fed may say something about possible interest rate rise in the US. I am looking to sell into this market but at higher levels nearer the Daily Resistance line (and possibly looking at the higher risk, 4H Resistance line)
Edit 8.00am NY time Market is at 1.2264 The market is continuing to slowly drift lower, even after the release of some better than expected IFO numbers out of Germany for June. This has shown me that the fundamentals are in line with the technicals and that both are indicating a resumption of the down move. I will definitely be a seller at the 4H Resistance line next time it moves up towards it as I believe that the down move is about to start again.
Edit 12.05pm NY time Market is at 1.2303 The market is moving up since the worse than expected US Housing numbers were released. Also affecting the market is Mr Geithner talking again about the banking situation and the repayment of the TARPS payments. (Almost every time this guy speaks the USD drops/ Euro jumps...LOL). The key issue to remember about the banks and TARPS is that when the GFC was starting, the Government made all the banks "mark to market" all their bad debts. This exposed all the banks bad debts in all their bad glory, and precipitated the worsening of the crisis. What the banking lobby was able to do, in the stealth of a night time, was the passage of a bill reversing this rule of"marking to market" all of their bad debts. This allowed the banks to effectively put their own values on the values of the bad debts (which are very optimistic values). Suddenly the banks have roared back into profits in the last 12 month (because they have written the value of the debts up in value). Why? Because they want the banking system to "look" strong and stable. (We were VERY close to a financial melt-down during the early stages of 2009). And the bankers don't mind at all..they get their new bonuses on the new profits. The rule to remember is that the worlds bank's bad debts are still there, ticking away. They have been disguised again, like they were before the GFC, ..but they are still there. Some has been transferred to the various Sovereign debt load of each country, but the banks still have a mountain of bad debts hidden away in the back rooms
The market is moving back up towards the 4H Resistance line which is today at approximately 1.2425. Depending on where the market goes in the next 24 hours, I may be a Seller at 1.2400-1.2425 area.
Edit 8.00pm NY time Market is at 1.2265 Since bouncing down off the 4H Resistance line, the market has gone into a lull. The market is drifting at the present time and has been in the same price area for the last 24 hours. I am hoping for a minor kick up to the 1.2400 area (the 4H Resistance line) so that I can Sell into this market. The FOMC Statement tomorrow may be a catalyst for a big move up in the USD (and down for the Euro) and I would like to get in for that move.
Emails
Email 1
Hi Wayne,
1) Been reading about how the Swiss National Bank intervened during May to weaken the Swiss Franc against the Euro. Yes I assume they do this buy buying the Euro and selling the Franc and they do it because most of their trade is with Europe therefore making exports cheaper? Yes, correct But if the Euro is in as much trouble as it seems, this seems a bit pointless? Yes, that is why most interventions rarely work in the long term (Swiss authorities have just announced last week that they will be curtailing their interventions in the future for exactly that reason) Also does this intervention affect (and if so how) the EUR/USD the amount of buying of the Euro by the Swiss gives the EUR/USD a small jump, but not a huge amount...the swiss buying is not huge relative to daily volumes on the EUR/USD market (and USD/CHF as its negatively correlated with E/U) the amount of selling of the USD by the Swiss gives the USD/CHF a small drop, but not a huge amount...the swiss selling is not huge relative to daily volumes on the EUR/USD market or does it only affect EUR/CHF? Yes, mostly
Been reading China is supporting the Euro because of its pension funds. Does this mean that China has invested pension funds in the Euro and will they be buying the Euro and selling a portion of their dollar reserves to support it? China is in the dilemma that it has bought everything so it is trying to juggle all their currency holdings to give the best return
I know you dont recommend brokers but I see that you have used an ECN. Yes I originally thought choosing a broker would be easy but then found out about dealing desks, non dealing desks, STP and ECN (the more I learn, the less I know!). Do you notice any differences in using an ECN and do you prefer them? Think I would like to use a true ECN (as opposed to STP) and finally found one I really like (Dukascopy). Have since learnt they now need to get a banking licence to continue in Switzerland so its put me off them a bit. There is a lot of discussion (especially on places like FF and other forums etc about the benefits of ECNs over other brokers. I think that focus should be on your trades rather than all the issues relating to various brokers. Provided that you deal with one of the larger and more reputable brokers, you will find minimal differences between them.When a trader starts trading at around 10 standard contracts at a time (that is, USD $1Million), then they can start looking at the differences between ECN's etc Now looking at one here in England (Barx) but wondering if their spread markup is a bit pricey. What would you consider an acceptable EUR/USD spread with no commisions to pay? 2 pips
When putting in an order I feel more comfortable using sell or buy stops rather than limits (whereas you mostly use limits unless its your AH strategy). So with your recent sell limit at 1.21 (market bouncing between 1.19-1.20) is it a bad idea to wait for the market to rise to 1.21 then place a sell stop at say 1.2070 with a smaller stop loss (60 pips say) to compensate for the lower price. thats is a good strategy, but it requires you to be watching the market all the time (or having alerts set to the various points) The advantages would be less likely to be taken out (although there is your AH strategy) and I could cancel the order if price rose higher and place a stop order at a better price? Correct
In your blog you have stated some statistics about fib level and support resitance success rates etc. Where do you get the statistics from, it would have to be alot of data to get reliable stats? It was... Mark ran the stats many years ago and looks at them all the time
Email 2
As you know I respect you a lot as a trader. Thank you I imagine you make a decent living by trading, Yes and maybe the mentoring group helps. I can assure you that the mentoring group costs a lot more (in my time) than I earn from it...but I enjoy it So I am just wondering why would you want to start up a website, in addition to the trading, managing the fund, and mentoring that you already do? A website is just more work, more distraction? I agree Where's the upside? There isn't any ...except that it would be a better format than the blog for the members.
You have to remember that all of this came about by accident. I was happily retired when I stumbled across Forex. Firstly, I had fabulous trading run when I started (I now realize just how good it was when I talk to other Fund Managers and brokers that can see everyone's accounts). Secondly, I started a small mentoring group which has grown slowly over time. (The group is much smaller than most people think. I have never advertised the mentoring group anywhere, even though I have been offered many, many opportunities to advertise in various places. And I rarely even look at Forex Factory lately because I am simply too busy and I dislike the personal attacks that happen there). Thirdly, I was encouraged by Mark to start the Fund in August, 2008 (It has performed very well in comparison to most other Managed Funds out there, especially last year when we had very strong double digit, positive growth and the majority of other Funds were dropping by 50% due to the Financial Crisis). I have restrained its growth because I do not want it to get too big but I know that Mark could easily expand it to 3 times its current size. So, in looking back, none of it was really planned at all...It just sort of happened ..and then grew ...And to be honest, that is how all my previous businesses were started and grew...It was mostly by luck and good fortune and surrounding myself with talented people
Email 3
I am quite a novice trader, so I'd like to write a trading plan before I start trading (as that's what all the good books say). Its a good idea I'm also going to practise forward testing on a demo account for a while and do some back testing using forex tester (allows you to replay the market at whatever speed you want, and place orders as you would in real trading). Ok I'm feeling quite cautious after burning three accounts and I'm determined not to burn another. OUCH...Hell no !!! Sounds like you are trading too aggressively
If I write my plan and send it over could you have a good laugh at it, I mean look at it? :-) Yes, certainly..the main issue is to set out your rules ..... and stick to them
If I'm asking too much, then I understand. Certainly not..I look forward to seeing it
Email 4
Could you please tell me who is financing the investors services like Moodys and other rating agencies. Brokers and banks etc, pay them for their research and advice
I have seen several time that they are publishing their result perfectly around significant technical areas like round numbers or resistance.Yes, because they are talking to all the biggest players and looking at the very long term numbers (something I am going to do more of...)
I dont know if its coincidence but they are perfectly helping the down trend:) it looks like you can be preatty sure that if the EUR will go up to far some of the agencies will speak out LOL Yes, they are paid by their clients (brokers and Investment banks etc) for their information are they independent ? No or are they just the tool of hudge hedge founds or other investors. Not tools, more like "part of the brotherhood"
Anyway thats the another point to just "bark with the big dogs"( i like that phrase:)Yes
My wife is started to get really involved in forex since i giving her % of profit at the end of the mounth :) that's just come pocket monay but it gives me some sense of good feeling:) she appreciate it a well:) LOL..Mrs Jackson takes all the profit ...and gives me the pocket money...LOL
Email 5
I have read most of the blog - I find it fairly easy to get the right entries based on Trend, Fib50, S/R & Round Numbers. Correct, though we can still get it wrong due to the "noise" of the market caused by volatility SL is quite simple too 100... E.g. on Monday last week I id'd the entry at 1.2100 and was delighted to see your sms with same entry. The A-H is also very simple to understand and apply, Yes, the method is very simple I have followed both your trades live with 2% stake.OK
My biggest challenge is to stay in the trade and trust my strategy - is my assumption correct that it will come with time? Yes I am assuming at this point in my trading that I have to let go of "past panic" and move away from my PC for most of the day, checking in every 4hours or so. Good strategy Strange thing is if I demo trade, the trades always play out the way it is planned. If I live trade, it bombs in my face. LOL...Join the club
How do you handle major / high impact news releases? Or do you leave it for the market "to do what market is going to do"? I leave it unless I have a trade that is near Break Even. Then I will occasionally take it off (depending on the profitability of the previous couple of trades)
I did read the section on adding on to a trade - every 150 you would place another entry with the first 2-3 entries being the higher % and the lower ones less, i.e. <1%. color="#ff0000">Yes
What is your exit strategy? Do you project a target, i.e. TP1, TP2 and let the market ride to these levels or do you simply apply a trailing SL 100 and let the market play out the trade? The one part of the original strategy that I am not using is the 100 pips Trailing Stop Loss. I have been using a fixed 100 pip Stop Loss then moving it down as the trade goes into profit. I am considering putting the 100 pip Trailing Stop Loss back into play
MESSAGE FROM JACKO 629
It is
3.00 am NY time Monday June 21 and the market is at
1.2452
On a technical basis, the Daily Resistance line on the 300 daily Chart ( starting at 1.5140 on Dec 2, 2009 and touching 1.3679 on April 13) is now currently at approx 1.2950.
However, if we drop down to the 300 bar 4H charts (starting at 1.3679 on April 13 and touching 1.3360 on May 2), the Resistance line is now currently at approximately 1.2450. (where it is now) .... The more adventurous traders may see that as an opportunity to take a trade, but I am prepared to wait for the the stronger Daily chart to have effect On a fundamental basis, there has been little change in the European situation. If anything, the position has got worse. So we are seeing a technical bounce and some short covering by the larger hedge funds. Also there is a lot of chatter today about China letting the Yuan appreciate against the USD but I disregard it since China is strong on talking about letting it appreciate but they rarely do anything about it. The reason is that a weak Yuan allows them to continue to have an advantage for their exports.
Edit 8.00am NY time Market is at 1.2393. The market has indeed bounced down from the 4H Resistance line. The market is moving primarily on the news of China and the appreciation of the Yuan (which, in turn, strengthens the USD). However, I have lived in Asia too long to believe that China is going to substantially reduce its trade advantage over the rest of the world in the present time. China needs the cheap Yuan (and big exports) to keep its huge workforce in employment. The one thing that China fears more than anything is social unrest caused by unemployment.
Edit 12.05pm NY time Market is at 1.2375 The adventurous traders are traveling quite well on the bounce down from the 4H Resistance line. The market is looking weak and they may have a good short term trade in place. I am still waiting for the market to move towards the Daily but I am also looking at the shorter 4H time frames now for potential, although riskier, trades.
Edit 8.00pm NY time Market is at 1.2325 The adventurous traders have done very well on the bounce down from the 4H Resistance line. However, we may see another move back up towards the Daily Resistance line very soon. I will be looking to enter a Sell position when it does.
Emails. After traveling back to home last night, I am back in the land of fast and reliable internet connection. I am now working steadily through the backlog of emails. There are some good ones that I will publish tomorrow
MESSAGE FROM JACKO 628
It is
3.00 am NY time Friday June 18 and the market is at
1.2380
The market has been as high as 1.2413 in Asian trading but has reversed direction in the lead up to the European session. The market has been steadily moving counter trend all week and heading upwards. I am still a keen Seller but am waiting for the market to get closer to the Resistance lines. (I have no interest in taking any counter trend trades).
Edit 8.00am NY time Market is at 1.2376 In a wide ranging interview earlier today, the Russian President Medvedev stated that he could not rule out the collapse of the Euro as the European Union struggles to contain the sovereign debt crisis. This was quickly followed by the startling announcement by the French Economy Minister, Mdme Christine Lagarde, that the Euro has been saved from collapse and that the Euro is now in absolutely no danger... The market has been steadily moving counter trend all week and heading upwards. I am still a keen Seller but am waiting for the market to get closer to the Resistance lines. (I have no interest in taking any counter trend trades).
Edit 1.30pm NY time (A little late. The conference presentations are running overtime). Market is at 1.2364. The market is doing very little today. It is a Friday and we are now going into the afternoon session, so we may see closures of the long positions accumulated this week by traders.
Edit 8.00pm NY time Market is closed. This week has seen a sizable move upwards as the market continues to correct against the deep falls we saw from the beginning of the year. This appears to be a technical reaction move based on the lack of any new disturbing major news events and the profit taking of some investors. There is still a long way to go before it gets to the Daily Resistance line and the likelihood of the present move being a change of trend is very small. We have not yet seen the bottom of this down move in the Euro.
Emails I am traveling this week so I may be a little slower on replying to emails. I will be back on June 20 when I will be back in the land of superfast internet speeds (Hong Kong).
At the current location, my blog uploads and email responses are taking forever to upload and some are dropping out after I have spent like 20 minutes drafting the email replies (and so I lose the reply..... Auugh !!!!!!). Its amazing how we now expect the whole world to have fast and reliable internet all the time now.
MESSAGE FROM JACKO 627
It is 3.00 am NY time Thursday June 17 and the market is at 1.2250
The market retracement is still continuing. However, the weight of the fundamental issues of the European situation is slowly unfolding, especially the slow motion movement towards a bailout of Spain. I am currently on the sidelines for a short while to see where this move is going to go. I am a keen Seller but am waiting for the market to get closer to the Resistance lines.
Edit 8.00am NY time Market is at 1.2375 The market has powered up this morning in European trading towards the technical Resistance areas (see Message below) on the back of a better than expected Bond auction. It certainly smells like a small intervention. ( Call me a jaded cynic, but I would suggest that the ECB was the primary buyer ... despite their Statements that they are only dealing in the secondary bond markets... because if their lips are moving, they are lying). The ECB would be buying Spanish Bonds to support the Spanish market, because the cost of a bailout would be so much more expensive. The problem is that these short term support measures do NOT work in the long run. The Spanish markets will continue to fail and that will then hammer the Euro again
Edit 12.05pm NY time. Market is at 1.2363. The market has reached a high of 1.2410 but is struggling to maintain the momentum from earlier today. There may be a little more upward action to come. I am still a keen Seller but am waiting for the market to get closer to the Resistance lines.
Edit 8.00pm NY time Market is at 1.2390 The market has been very quiet in the US afternoon session and the lead up to Asian open.
Emails I am traveling this week so I may be a little slower on replying to emails.
MESSAGE FROM JACKO 626
It is 3.00 am NY time Wednesday June 16 and the market is at 1.2346
As stated yesterday, this market retracement is clearly much stronger than I expected. I am currently on the sidelines for a short while to see where this move is going to go.
On a technical basis, the Daily Resistance line on the 300 daily Chart ( starting at 1.5140 on Dec 2, 2009 and touching 1.3679 on April 13) is currently at approx 1.3000. Even if we drop down to the 300 bar 4H charts (starting at 1.3679 on April 13 and touching 1.3360 on May 2), the Resistance line is currently at approximately 1.2550. .... So we have a long way to go before we hit strong Resistance levels.
On a fundamental basis, there has been little change in the European situation. If anything, the position has got worse. Greece has been downgraded again and the PIIGS are all seeing higher interest on their bonds at the Govt bond auctions. So we may simply be seeing a technical bounce and some temporary short covering by the hedge funds.
Edit 8.00am NY time Market is at 1.2278 The market has moved down marginally in European trading based on rumors that a bailout for Spain is getting more likely. Spain has been borrowing at a fast rate from the EU fund (because the credit markets have stopped lending to Spain) and the interest rates Spains bonds are getting substantially higher. Despite all the nice words of support from ECB officials that Spain has not applied for a bailout and that Spain is strong, the likelihood of a bailout operation in the next month is getting much higher.
Edit 12.05pm NY time Market is at 1.2323 The market has bounced up again over the 1.2300 mark. I am a keen Seller but am waiting for the market to get closer to the Resistance lines. The fundamentals are still to play themselves out. The Euro is still in serious trouble and I still believe that we will see 1.1000 by the end of this year.
Edit 8.00pm NY time Market is at 1.2300 The market has stalled at the 1.2300-1.2350 mark. The market has been moving up towards the technical Resistance lines, butit is straining under the weight of the fundamental issues of the European situation that is slowly unfolding, especially the slow motion movement towards a bailout of Spain. Spains reliance on the EU fund is getting worse and its proportion of the funds being lent to Spain is starting to crowd out any hope of any other EU countries being able to access the EU fund. I am a keen Seller but am waiting for the market to get closer to the Resistance lines.
Emails I am traveling this week so I may be a little slower on replying to emails.
MESSAGE FROM JACKO 625
It is 3.00 am NY time Tuesday June 15 and the market is at 1.2174
My A-H Sell trades at 1.2200 were activated at 9.42pm NY time last night and are now playing itself out. I have a 100 pip Stop Loss.
Edit 8.00 am NY time Market is at 1.2263 The market has moved back up in European trade today but I am staying with the trade and letting it play itself
Edit 12.05pm NY time Market is at 1.2338. This market retracement is clearly much stronger than I expected. My A-H trade has now also been stopped out. I am retiring to the sidelines for a short while to see where this move is going to go. The Daily Resistance line on the 300 daily Chart ( starting at 1.5140 on Dec 2, 2009 and touching 1.3679 on April 13) is currently at approx 1.3000. Even if we drop down to the 300 bar 4H charts (starting at 1.3679 on April 13 and touching 1.3360 on May 2), the Resistance line is currently at approximately 1.2550. .... So we have a long way to go before we hit strong Resistance levels.
MESSAGE FROM JACKO 624
It is 3.00 am NY time Monday June 14 and the market is at 1.2181
The market has risen in the Asian session to as high as 1.2207 knocking me out of my trade at my Stop Loss point. I am now waiting for the price to move to 1.2250 at which time I will place my AH trade order to Sell at 1.2200.
Edit 8.00am NY time Market is at 1.2247 The market has moved up on some serious short covering (so the brokers are telling us). The market has been as high as 1.2258 so my AH order has been activated. I now have an order to Sell at 1.2200. (If the market continues to rise it will not be activated, but if the market is reversing back into the down trend, then I will be activated and be back in the market in the direction of the trend)
Edit 12.01pm NY time Market is at 1.2278 The market has moved up in the US morning session in a counter trend move based on some profit taking. My AH Sell order is still in place at 1.2200.(If the market continues to rise it will not be activated, but if the market is reversing back into the down trend, then I will be activated and be back in the market in the direction of the trend)
Edit 8.00pm NY time Market is at 1.2211 The market has been as low as 1.2204 so my A-H SELL trade has not been triggered yet. But it will be soon, I think.
Emails
Email 1 (a good quote)
First rule: do not lose money. Second rule: do not lose sleep. Exactly...As soon as it is causing loss of sleep, it is time to reduce the size of the trades
Email 2
When the euro was going up and dollar going down and then the reversal happened in Dec 2009 it was pretty obvious why it did. The NFP numbers have improved,yes the unemployment rate was improving and also the Greece problems started to emerge Yes , so all that changed the markets' sentiment about the EU. BTW, I didn't get why last Friday's NFP report going from 290k to 431K was a bad thing, I know it was lower the forecasted, but still. It was not a bad thing..it was the fact that the 431K of extra jobs was mainly govt casual employees being employed to undertake a census I know your target is 1.10, but when do you see the Euro starting to reverse ? Not in the medium term what signs should I look for ? Break of the Daily Trendline over 300 days besides a broken trendline. A change in Fundamentals based on sentiment Do you think the European Union will try something drastic when/if the Euro reaches parity. No I have several long term positions, mostly from high to mid 1.30s and some from 1.20s. Excellent Anyway, I'm not looking to exit on a 300-400 pullback, I experienced a bigger pullback than that on 5/10/10, at the same time I would like to prepare an exit strategy for when one is necessary, because nothing goes up or down forever. Correct, but I think that Europe is a very sad case at the present time and will get a lot worse before it gets better
Email 3
Why won't the declining Euro make their exports cheaper, increase demand for their products/increase tourism, thus increase their tax revenues, and stabilize the Euro? it will take years for Europe (and also, to a lesser degree the US) to re-build their export (especially manufacturing) industries. They have been decimated by China. I read somewhere that China is building cities and products like steel and computer componentry, while the West is building Facebook and other social networks. In the intervening period, the interest on the Western debt is accumulating at a furious pace
Email 4
Also I have a question about trend following in bull vs trend following in bear markets--have you noticed differences in how your method pans out between a bull and bear market? Hmmmm.. Yes Like in a bull market the pullbacks would be more sudden, but in a bear market the pullbacks would be more gradual while the trend moves would be more sudden, since the downward moves are usually faster. Correct ..Just wondering if this does anything to your method and how much of a better price you try to go for when looking for an entry point during a pullback. I think that in times of bear markets I need to increase the aggressiveness of my trades to compensate for the increased speed of the drops For example, say market is at 1.39 and it's a bull market and you're looking to get in at 1.3750... but you might be patient and see if you could get in at 1.3725 or something once market has hit 1.3750 to reduce the probability you'll need an AH...but in a bear market...if market is at 1.39 and you're looking to get in at 1.4050...would you be less likely to try and get more out of the retracement because upward momentum is typically lower.....Any other differences between following a bull vs following a bear? See above..but basically, the bear market has tended to be much faster than the Bull...but that may just be a sign of the current economic times we live in
Email 5
You say that you are willing to close the trade by 12.10pm NY time if it is in negative pips! Can i ask you what makes give so much attention at this specific time? Firstly, if I am in loss then I don't want to be further exposed over the weekend, and Secondly, the time is when the US traders start leaving to go home for the weekends or getting ready for Friday night functions, so they start closing all their positions for the weekend Personally i have always tried to finger out time trading especially when i read at forexfactory (i think) that such type of trading actually exists and some people do trade on time. Is it your trading plan has to do with this? and could you say that trading could be based only on time? is that possible? It is possible, but it is not statistically reliable enough to trade off... But the start of a new trading session will often see a reversal of the previous session (especially if the earlier session was extreme). Also, the US session often reverses after lunch (again, especially after an extreme move during the morning session)
Email 6
A while ago you mentioned you were organising a new web site, is this still on the cards or have you binned the idea We have a fully built website that is ready to go any time we want to launch it. It has a lot of features and bells and whistles, but I have put it on the backburner until I am happy with a better performance from my trading...I don't want to be distracted by the technical issues involved in a much more comprehensive and complex website
MESSAGE FROM JACKO 623
It is 3.00 am NY time Friday June 11 and the market is at 1.2105
The market has been very dull in the Asian session. My Sell trade has been filled and I am now letting it play itself out. The market has been higher than 1.2100 so there has been plenty of opportunities for traders to get set with their trades. If my trade is in profit at 12.05pm today, I will let the trade stay open over the weekend. If the trade is in negative pips at 12.05pm, I will be closing the trade at 12.10pm NY time.
Edit 8.00am NY time market is at 1.2145 The market has drifted up marginally in European trading. I am still in my trades with a 100 pip Stop Loss but I will be reviewing the trade at 12.05pm today. If my trade is in profit at 12.05pm today, I will let the trade stay open over the weekend. If the trade is in negative pips at 12.05pm, I will be closing the trade at 12.10pm NY time.
Edit 12.01pm NY time Market is at 1.2072 The market is below where I entered so I have decided to let the trade play out over the weekend. I cannot see any major reasons for the Euro to rise, and there is more possibility of bad news than good news coming out of Europe. I am keeping the trade open over the weekend.
Emails
Some excellent emails this week. I will post the best of them on Monday. I also have a member of the group who has been testing a quirky and unusual trade method over the last two years and has had good results. I will post it here on the weekend
Edit Sunday morning... I am having big problems transferring Williams method and results tables into the blog. It causes all my blog texts to change size and font and I am also having big problems transferring the results tables. (The frustration of being a techno-moron...) I am looking at an alternative way of doing this
The best solution is: If you would like a copy of Williams method and Results table, just email me and I will email it to you
MESSAGE FROM JACKO 622
It is 3.00 am NY time Thursday June 10 and the market is at 1.2038
The market has moved up as high as 1.2063 in Asian trading. The market is moving up ahead of the ECB interest rate decision due out later today (7.45am NY time) where it is expected to hold interest rates steady at 1%. I have a pending order to SELL at 1.2100. I have a 100 pip fixed Stop Loss. I am now waiting for my orders to Sell at 1.2100 to be filled.
Edit 12.55pm NY time Market is at 1.2083 I apologize for missing the previous edit. I have been tied up with something else that was very important. (However my notices of my Sell orders have been in the blog for the last week) My sells at 1.2100 have been filled at 9.30am this morning.
Edit 8.00pm NY time Market is at 1.2120 The market has moved up to the Support turned Resistance line (which was the 50% fib line of the 0.8220 (Sept 2000) and 1.6038 (June 2008) at 1.2129). My Sell orders at 1.2100 were filled and I am now letting the trade play itself out
MESSAGE FROM JACKO 621
It is 3.00 am NY time Wednesday June 9 and the market is at 1.1956
The market has been bouncing around between 1.1900-1.2000 (a 100 pip range) all week and not giving a clear direction. We should see a break out of the range in the lead up to the news events on Thursday. I have a pending order to SELL at 1.2100. I have a 100 pip fixed Stop Loss. I am now waiting for my orders to Sell at 1.2100 are filled.
Edit 8.00am NY time Market is at 1.2000 The market is quietly moving up towards my target. The market has been doing very little so far this week, but the lack of any major news announcements from the US and Europe would be keeping the market subdued. The news announcements out tomorrow will have an effect. The ECB statement on interest rates may have some impact, but unless there is something dramatic in the statement, I would expect the the impact will not be very strong. I believe that the ECB used all their economic ammunition on the statement that they were establishing a fund of almost one Trillion Euros to support the EU countries and their currencies.
Edit 12.15pm NY time Market is at 1.2040 The market is still quietly moving up towards my target. It has been as high as 1.2073 and I expect to have my orders filled in the next 12 - 24 hours.
Edit 8.00pm NY time Market is at 1.1988 After reaching a high of 1.2073 (just short of my 1.2100 orders), the market has retreated to its current level. I am left hoping that there may be one last move up to hit my target sell price before the news due out tomorrow
MESSAGE FROM JACKO 620
It is 3.00 am NY time Tuesday June 8 and the market is at 1.1972
The market has drifted up in the Asian session. After the sizable move down at the end of last week, we may see some profit taking this week (hopefully allowing the market to drift up to 1.2100). But as I have stated many times, in the longer term the market is heading to 1.1000 by the end of this year. I am still looking at 1.2100 as my target sell price.
Edit 8.00am NY time Market is at 1.1941 The market has dropped down to 1.1900 but bounced back up quickly. Usually if a market hangs around a Support level like 1.1900, it will usually break it and continue down. The fact it bounced away quite quickly would indicate that we may see a bigger move upward from where it is at the present time. I am still looking at 1.2100 as my target sell price
Edit 12.05pm NY time Market is at 1.2003 The market has been bouncing around within the 1.1900-1.1990 range all week and not giving a clear direction, probably due to the lack of any major news events on the US forex calendar and the politicians are not talking very much. They must be giving their other end a chance. (Many years ago when I was younger and a little less modest about my achievements, my mother would listen for a while when I was in "master of the universe" mode. Then she would would lean over and quietly say..."Now Wayne, it's time to give your other end a chance". I immediately would recognize that I was talking though my ass and it was time to talk less and behave more modestly...LOL.).
My wife is much more subtle...if I ever start to sound too serious around our friends, she simply tells everyone in a loud voice that I am talking through my ass...LOL (I love her for keeping me balanced...)
I am still looking at 1.2100 as my target sell price... the market is now just above 1.2000... the market is getting closer to my target.
Edit 5.40pm NY time Market is at 1.1970 I have just placed a pending order to SELL at 1.2100. I have a 100 pip fixed Stop Loss. (SMSes will be sent now)
Edit 8.00pm NY time Market is at 1.1960. I am now waiting for my orders to Sell at 1.2100 are filled. The potential mover will be the meeting of the ECB on Thursday, though I can't see that they have any new options available to them to strengthen the Euro.
Email 1
I just have a question regarding your NY visit. When you said the traders in NY you met didn't use a stop loss, how do they control there money management? They did not use fixed SLs. They use discretion based on experience of the senior traders Or is it that there accounts are so large MM is not an issue? They appeared to have disregard for the safety of the Funds. They were more interested in getting a high performance for their bonus...and took risks that I would not have taken. (Probably why so many blew up during the GFC in late 2008 and early 2009) But having said that, if I had stayed in with my trade that I closed out at 1.3050 in May, I would be 800 pips in positive instead of the 325 pips it cost me
Email 2
I try not to think too much about my trades and have used your policy of trading with the trend and using the round numbers for entries. I have shorts at 1.2500, 1.2400, 1.2300, 1.2200, 1.2100 and 1.2000 and want to hold them to your 1.1000. Do you think that I should keep adding. I am worried that I am on a high and am risking too much. But I am loving the profits and want to ride this drop all the way. You have done well. As long as you are treating each trade as an individual and seperate trade with its own stop loss and each trade is limited to no more than 2% per trade you should continue to do well with this move. (I would also suggest that if two of your latest trades get stopped out, that you close them all and take your profits in case the market starts to reverse).
MESSAGE FROM JACKO 619
It is 3.00 am NY time Monday June 7 and the market is at 1.1942
The market was hammered down in Asian markets today, dropping to a 1.1875 before recovering to its current price. The break of the 50% fib line of the 0.8220 (Sept 2000) and 1.6038 (June 2008) at 1.2129 last week was a strong technical sign. Furthermore, the absence of any strong statements of support for the Euro from the G20 meeting on the weekend has just killed any major support for the currency. However the fact that all the currencies paired against the US dollar have fallen (and most stock markets are tanking), demonstrates that investors fear and risk aversion is creeping back into the markets. There is a "flight to safety" of the USD starting again.
Over the last few weeks my strategy of selling into pullbacks and retracements has not worked. There have simply been insufficient levels of retracement. The market has been dropping faster than normal and I have set my retracement levels too high. It is no excuse, but the alternative would have been to set the targets too low and risk having the market blow through them and stop me out. And I have also seen situations where the market reverses from similar falls before (see the 2000 pip retracement in December 2008).
Having said that, I am still keen to sell this market, but have set my target at 1.2100. (I will SMS when it gets closer to the target).
Edit 8.00am NY time Market is at 1.1940 As stated above, my strategy of selling into retracements and pullbacks has not worked in the last few weeks because I have set my target prices too high. (For example, my 1.2500 target was missed when the price only went as high as 1.2453). I have simply been too cautious. Some of the more adventurous traders who attacked the market more aggressively than me have done well. (One interesting fact that I have noticed is that traders interest in taking counter trend trades, or traders reporting losses from counter trend trades has dropped significantly in the last month.... I think that it is sinking in to most traders now that counter trend trading is simply not worth the risk) I was tempted today to set my target at the fat round number of 1.2000 but am looking at the 50% fib resistance line (as Support turned Resistance) as the safer option. I am still keen to sell this market, and have set my target at 1.2100. (I will SMS when it gets closer to the target).
Edit 12.05pm NY time Market is at 1.1962. The market is drifting in the US session today. There is very little on the Forex calendar this week until Thursdays US Trade Balance and US Unemployment Claim numbers are released. Then on Friday there is the US Retail Sales numbers. In addition,there will be a Statement from the G20 regarding the outcome of their recent gabfest meeting, though I doubt that they will have anything profound to say. I really think that the Trillion Euro bail out fund announcement was the best shot that they had ... and it only lasted a week before the market realized that it was all bluff.
As a result of the above, we may see some profit taking this week (hopefully allowing the market to drift up to 1.2100). But as I have stated many times, in the longer term the market is heading to 1.1000 by the end of this year
Edit 8.00pm NY time Market is at 1.1923 The market has been relatively quiet leading into the Asian session. I am still looking at 1.2100 as my target sell price.
MESSAGE FROM JACKO 618
It is 3.00 am NY time Friday June 4 and the market is at 1.2181
The market has been very gradually moving up in Asian trade. Today we have the biggest market mover on the US forex calendar with the US Non Farm Payroll numbers being released at 8.30am NY time today. Also we then have the G20 meeting of Finance Ministers (that is , politicians from around the world), so we can expect to hear lots of strong rhetoric about how the world is in great financial shape and what a great job the world's Finance Ministers are doing. (It will have an impact, but it will be very short lived).
Edit 8.00am NY time Market is at 1.2064 Ouch..!!! The market is clearly expecting a very strong NFP out of the US and a very weak response from the G20 meeting today. The NFP numbers need to be very good otherwise this will see a big retracement.
Edit 12.05pm NY time Market is a 1.2000 The US Non Farm Payrolls rose by only 431K vs the expected 536K but the Euro continued to fall on the new rumors that Hungary is now facing serious problems with its sovereign debt. Hungary's own Prime Minister has today stated that the possibility of default "is not an exaggeration" and that the country is in a very grave situation. I was caught out by this latest drop which occurred one hour before the US market opened and am now fuming at the miss. I am now hoping that the G20 will come out with some strong comments to lift the market over the weekend and give me an opportunity to get into this market. I would now actually welcome G20 talk of an intervention at this point in time to give the market an up lift and allow me to get into this market.
MESSAGE FROM JACKO 617
It is 3.00 am NY time Thursday June 3 and the market is at 1.2300
The market has become more active in Asian trading as the market tries to move within the range. There is a basic psychology in all of us that tells us that "If the market is not falling anymore... then it must rise". It is not always true, but it is a strong logic that drives many traders. In weak markets, it tends to be a self fulfilling logic. The market has been sitting in a medium sized range now since mid-May. I am getting more confident that the next move may be an upward retracement to the target 1.2500 Sell area in preparation for the next leg down.
Edit 8.00am NY time Market is at 1.2263. The current market is like a bad case of constipation ... There is lots of hot air.... and everything is very sluggish and there is no movement... And you know something big is going to happen, but you just don't know when. And it involves lots of sitting, waiting and hoping that something (anything !!!) will happen soon..... LOL
The market is just moving up and down and taking out the traders with small stops. I am still confident that the next move may be an upward retracement to the target 1.2500 Sell area in preparation for the next leg down.
Edit 12.05pm NY time Market is at 1.2190 As stated yesterday, the market has drifted closer to the bottom area of the medium sized range between 1.2150 and 1.2400 again which it has been in since May 15. The US session was reasonably dull with only a strengthening of the USD (weakening of the Euro) after the release of the US Non-Manufacturing PMI numbers at 10.00am. Even the ADP Non Farm Payroll numbers (which usually causes a significant move) has negligible effect at 8.15am. It just goes to show that the main game is built around the European situation. The market is currently being driven by Fundamental news announcements, especially those out of Europe, and when there are no news events, the market is just drifting. I would expect to hear lots of baseless rhetoric from the G20 meeting tomorrow and Saturday about how healthy the Euro zone economy is and will be in the future, which may have the effect of kicking the market up maybe 100 pips. (If the Finance Ministers lips are moving...They are lying !!)
I am waiting for the market to get back up to the upper area of the range and I will again be a Seller at the 1.2500 area, ( though I am also still considering reducing it to 1.2400). I will be watching the price action as it gets closer to those targets. I don't want every trade, but I want every trade to be as risk-free as I can possibly make it.
Edit 8.00pm NY time Market is at 1.2180 The market has not moved much and is still in the bottom area of the range. The G20 meeting tomorrow has the potential to move this market.
Emails
Email 1
Been ploughing through books and websites to learn about economics, fundies etc. Getting there but the tricky bit at the mo is trying to figure out what sort of impact each article I read has on the whole picture. For example when naked short selling has been banned in Germany, I dont know how to figure out what sort of impact it will have (I then read that they can just use London offices to overcome the barrier) Or when ECB releases so many gazillions, how does it affect things. In physics I could always use standards as comparisons. Im sure Ill get there though...It is really just a matter of experience...Unlike physics, there are no absolute meaures when measuring the impact of news on traders...but you wll quickly get the "feel" for it
Anyway, listening to BBC Radio 4 and the business editor Robert Preston came on to talk about a dramatic increase over the last 4 weeks in the bank libor rate. He said "it may be that what's persuading banks' creditors to demand a higher rate for their loans is the expectation that European banks' will suffer big losses on their holdings of assorted eurozone government bonds and their loans to assorted European property markets". Seems like another indication that Euro in trouble, but how do you (or do not) regard this. It has big implications...the banks are bust.. and the govts are trying to hold them up by lending them Govt (taxpayers) funds...Now the Govts are going bust...
Email 2
Do you see the current crisis sparking another crash/down-leg in equities?
Not a crash, but a down leg Or will the central bank's of the world print our way out of that?
They are trying to, but it is not working...
Email 3
You said to look at ATR to see the volatility. Can you tell me please what period you found works best in calculating ATR: 10, 14, 21 days ... ?
I trade the Daily charts so I want to see volatility on a daily basis...So I set my ATR chart to 1 Day And what if ATR is at 220 pips (like it is now for EURUSD). Will youuse stop losses of 200 pips or half of that ?
Instead of increasing my risk to 200 pips, I will become a lot more selective on my trades Email 4
Must be frustrating sitting on the sidelines. Yes !!! I admire your self discipline doing this. Do you think you would be less risk averse and jumped in this sell-off earlier if you were managing only your money, Yes and didn't have responsibility for other people's money? yes definitely
I have applied your principles on the 4 hr charts and caught a few chunks of this move. Good But once I got greedy, risked 30% on a trade and when it went wrong (as it does when one over-leverages), 30% ????? NOOOOO !!!! I tried to hedge by buying the opposite direction, Noooo..admit the mistake and close the original trade and got into a real mess. Got out with a big loss, wiped out the past few weeks gains. Never do that hedging "trick" again...It will always result in pain I know in hind sight what I did wrong, Good but its hard to control fear and greed at the time!! LOL...Yes it is
So, watching your discipline is a really good lesson. good
Email 5
I know that I have to read much more to learn how you do trading, but I have two questions for you I'd like to clarify.
1.- How can you predict so long the price at which the action is coming? For example: In your message 613 you say "..... The net result of those two statements is that the Euro is destined for a continued, and extended, drop in the medium to longer term. The target of 1.1000 will easily be hit by the end of this year". How do you know that the price will be 1.10 and not 1.15 or 1.05 or 1.00? Oh...I think that it will get lower than 1.1000, but I was not sure that it would get there (below 1.1000) before the end of the year..... I am now sure that it will hit 1.0000 but it may be early next year Are you using Elliot waves in a big big time frame to estimate the price in the future or how can you do it? No...I don't use Elliot wave theory at all
2.- If you are convinced that eur/usd will hit 1.2500, Why didn't you put a buy trade in 1.2200 or 1.2300 with a take profit of 1.2500? I am not prepared to take that kind of risk..trading against the trend has no insurance policy. Trading with the trend means that even if you make a mistake in the short term, the trend (and the AH strategy) will get you out of trouble
Email 5
How do you define 1.2500 the resistance area? I was looking at the horizontal Support/Resistance line at around 1.2500 dating back to March 4 2009 on the daily charts
Email 6
Since everyone seems to know when the ECB intervenes anyway, why don't they wait until holidays, like today, when no one else is in the market? They have to be "seen" to be playing in a "fair market" environment. It is a matter of trading "rules". .If they want to keep good relations with the market place, you don't crap in your own nest.
Email 7
first of all, sorry if I am going to make some silly remarks, There are no silly remarks...Only questions that need to be asked for you to understand... but I need to understand more and better about your strategy. OkI am following your trading rules, which basically are based on waiting for a pullback to enter the market. Yes What I dont get is: why dont you even consider a breakout to enter the market? The market in the last couple of months has been good for Breakout traders..BUT also, have a look at the recent lows on the Daily charts, becuse there are a number of cases where you have got your fingers seriously burned on "false breakouts". I suppose that it can be best summed up by my preference to "Sell at the Resistance line" rather than "Sell at the Support line" Starting from December 2009, the market began its downtrend, and (eg in a weekly view) the pullback where just a few, meaning that if we miss them (for any reason), then we miss most of the movement down and most of the pips (given how far it takes you the movement down). Yes...In hindsight that is correct, but very few traders saw that in advance. As a trading strategy, I am not keen on "Breakout trading" Following a breakout rule, statistically we would incur less losses (probability to enter a retracement vs probability to enter the trend) and more profitable trades. Yes, we can see that now, but no-one saw that in December 2009. Also as a long term permanent strategy for the longer term, I have doubts about its statistical reliability That seems to be particularly true for downtrends, while the uptrends seems to be less steep and fast, in that case just the pullback-waiting could pay off. Yes Of course it's better to get in at a better price, but isn't it better to just get in, rather then miss the trade at all? That could be considered "reckless trading" , and could possibly be based on hindsight after the event has happened Could the breakout rule be followed and applied WITH the retracement' strategy? Yes but the risk of one strategy has then been added to the risk of the second strategy...I prefer to trade the lower risk strategy
.
MESSAGE FROM JACKO 616
It is 3.00 am NY time Wednesday June 2 and the market is at 1.2211
The market has drifted closer to the bottom area of the medium sized range between 1.2150 and 1.2400 which it has been in since May 15. However, the Asian session was reasonably dull with no real indication of any major market moves. The market is currently being driven by Fundamental news announcements, especially those out of Europe, and when there are no news events, the market is just drifting. I am waiting for the market to get back up to the upper area of the range and I will again be a Seller at the 1.2500 area, though I am also still considering reducing it to 1.2400. I will be watching the price action as it gets closer to those targets in the London and US sessions. I don't want every trade, but I want every trade to be as risk-free as I can possibly make it.
Edit 8.00am NY time Market is at 1.2216 The market is keeping in a small range as the market tries to digest the action of the last couple of weeks and their implications. I am just waiting now to see which way it will move in the next period of time to give me a good trade. Not much we can do in this trading environment until a clearer direction is shown within this range that it has been in since mid-May. I am waiting for the market to get back up to the upper area of the range and I will again be a Seller at the 1.2500 area, though I am also still considering reducing it to 1.2400.
Edit 12.05pm NY time Market is at 1.2226 Oh my.... This market is deader than Julius Caesar at the moment. I am hoping for a news event to give it some life. I am almost rooting for Mrs Merkel or someone from the EU to say something outrageously stupid.. Oooops I forgot, they already have !! Like banning short selling or throwing a Trillion newly printed Euros at bankrupt governments with the hope that they will pay it back...!!!! This market has become so addicted to the instant stimulus of the news events of the last couple of weeks that it goes comatose when there is no new news. This is unlikely to last...the market will make a move soon. I am waiting for the market to get back up to the upper area of the range and I will again be a Seller at the 1.2500 area, though I am also still considering reducing it to 1.2400.
Edit 8.00pm NY time Market is at 1.2250 The market has gone comatose. The good thing is that the market can only get better in the next couple of days. Such periods of inactivity usually leads to a big move when it is over as all the traders get back into the market. I am getting more confident that the next move may be an upward retracement to the 1.2500 area
Emails
Email 1
I'm reading through your blog starting in 2007. I'm loving it and am very glad to be a group member. Thanks again for inviting me. Here are my first questions about trading your method. I'm afraid I've been a bit longwinded, will avoid this in the future but have some stuff upfront to get straight.
1) I know you don't like to recommend brokers, but I am a confused new FX trader and need a little help picking one amidst the deluge of brokers' online marketing. I'd greatly appreciate your answers to help me select:
a) do you trade commission FX or spread-based with a dealing desk? I use one ECN and 4 of the larger standard brokers
b) you said you go with larger brokers. Does that mean like Citibank / Deutchebank/ interactivebrokers kind of large? That depends on your trading size.. They are for big traders in the main or with FXCM, oanda, or forex . com Good enough for most traders instead of some little online bucket shop?
c) is there any broker you would caution me against? Any small or "unknown" brokers...Just stick with the bigger and more reputable ones
d) I'm considering using thinkorswim run by TDameritrade--any cautions against this? I don't use them so I can't give an opinion they have both commission and spread based pairs, but EUR/USD spread there can get up to 3-4 pips sometimes
e) if you don't trade commission, what spread will you tolerate on EUR/USD? 2 pips max
f) I will not discuss your comments on brokers with anyone, ever. I don't recommend any brokers to any of the group. I don't wish to be seen to be "affiliated" with any one broker and I would not want to be seen to be promoting one broker over any other. (It could give an impression that I am "influenced" or "incentivised" to refer members of the group to them…which I have never done). What I do recommend is that you deal only with the bigger (and more reputable??) brokers. Then just have a look at their Demo platforms and choose the one you feel most comfortable with working with
Regarding our brokers,we use an ECN and 4 of the biggest brokers, but I had a bad experience about two years ago where I gave the information about our brokers to a young guy (who in turn told some other traders) and they all started pestering our brokers saying that they were friends of mine and wanted special deals etc on spread and when a trade went against them they said they would get Mark involved to sort it out and it nearly wrecked our relationships with the brokers. I never want to go there again. Mark was apoplectic about it. And the young guys also thought that we were unfair when we said that we didn't want them using Marks and my name as a lever, so I lost a friendship there. It turned into a real mess so I don't intend doing that again. Also, I don't want to be seen to be "affiliated" or recommending any brokers. I always suggest to traders to deal only with the bigger ones who are more reputable
2) For you personally, what timeframe chart constitutes the major trend? The dominant support or Resistance line on 300 bars on a Daily chart Do you go as far out as the monthly, or are you sticking to multiple timeframe analysis pretty much between the weekly, daily, 8hour and 4hour? Daily only...because I trade off the Daily charts
3) I noticed that sometimes you have several positions on. So I know when to take it easy, what is your absolute max account % at risk at any one time? No limit...each trade is treated as an independent trade In other words, what is your max (pips exposure * $perpip,perlot / account size) where "pips exposure" includes all loss regions left by all open positions' trailing stops? To make that a lot simpler, if all of your positions were currently stopped out no matter where the stop was, what's the max % of your account that you'll tolerate losing if that happens at any given time? 2% per trade
4) The anti-hedging method loses money when the major trend reverses. Yes, it may the first time after the trend has changed Assuming major trend = weekly/daily, this isn't very often. Cool. But antihedging also loses money when the market is in a countertrend through the trailing stop but does not go at least 50 pips past the stop to trigger the antihedge limit order. Yes, but that is rare My question is: it must be your experience that you get stopped out at a loss but no antihedge limit order is placed (because market didn't go countertrend far enough after you stop was hit) VERY infrequently ( 5%) Thats correct
5) Your entrees seem to be a bit "by feel," and are the part of your strategy I'm most fuzzy on so far. What hard and fast rules are you considering for an entry and on what timeframe, and once they're met, what guiding principles are you thinking about when you feel out placing an order. I'm not looking for a formula, but am trying to wrap my mind around your entry method. I mostly look for the trade to be opened at the Resistance level, though I am also pragmatic enough to see that if the market is strongly moving in one direct it may not get all the way back up to the Resistance line so I have to take a "calculated risk" to enter at a position that will, hopefully, not result in my 100 pips SL getting hit It seems like once I have the entry method down, your strategy will, in large part, manage itself. Correct
Email 2
I've been monitoring the EURUSD market for a while now and will like to seek your advice.
1. Given the serious fundamental nature of the Eurozone problems, do you think the Euro currency will weaken so much until its eventually dismantled? No..The Europeans have too much vested in the EU project What other currency pair will you trade, if this worst-case scenario were to occur? DeutscheMark /USD or GBP /USD
2. Am I right to say that the current ATR for EURUSD is around 50 pips? Noooo..Around 150 I read somewhere online that previously before the GFC, the ATR is around 30 pips. No, it was higher than that..more like 100
3. Do you factor in risk-return in your trading system? No The books advise that we should always trade with a RR of 3:1. The risk can be measured (by the size of the SL) but the Reward can never be measured beforehand because the result is unknown until after the trade is over
4. In a scenario where your trade got stopped out (at a loss) and you immediately see another potential setup coming along, which one takes priority, an AH trade or a normal setup trade? An AH takes priority or do you execute both simultaneously? I don't ever recall doing an AH and a normal trade simultaneously. I have had one trade trigger and then later an AH trade is also triggered, but not simultaneously
5. We all know that we should trade with the main trend. However if I wish to maximise turnover of my trading capital, can I also trade counter-trend, but with a smaller take-profit target? You can...but the risk is higher Say for example I take profit at 50 pips when trading with the trend, but when trading countertrend I'll take profit at only 25 pips. Hmmm what are the SL sizes ?? I am finished Counter Trend trading for the present time
Email 2
Do you use COT and Open Interest in the futures mkt to analyze fundamentals and whether the trend is changing? No, the COT is too slow to show the moves and the futures market is not faster than the Spot Forex market
Email 3
The fall in the Euro is obviously good for Euro exports but I was wondering at what point will the ECB step in to defend the Euro and try and stabalise it. The lower the euro the more able they are to compete with other areas like Asia
Also, at what point do you think the big players will be satisfied that a balance has been reached with the EUR/USD and start to unwind their positions. 1.1000 or 1.0000
Email 4
After reading about your "revenge trading", I just want to acknowledge the urge that I have , also wanting to get my loss back. We all suffer from the urge to revenge trade...it is a common reaction to a loss. But I still hate giving my profit back to the market. We all hate that idea Any advice, or any experience to share with the rookie me? I am not dishearten, because I take this as an experience that I should pick up in the life of a trader. Furthermore, I am trading with a Demo account at the moment :))))) I am surprised that you were hit with three AH trades... Are you allowing the price to go 50 pips beyond where you were stopped out before putting on the AH Limit Sells trades
Email 5
with all this fundament whoo ha going on as a student should i try to analyze the charts to see if i can find a technical edge in this situation? The Techs are waay in the background at the present time or do fundamentals just blow all tech views out of the water in your experience? In this situation and at this time, the Fundies are all important...watch the reaction to news events..they are as big as any moves I have attached a chart with some trend lines or channel (maron lines)if you like and i realized that your (orange line) is you old support line which certainly is possible but not for a another week i would think..........Its possible, but the news events could easily blow that line
Email 6
How did you arrive at your 1.1000 target by the end of the year? Looking at the monthly charts, looking at the round numbers and looking at the fundamentals What do you expect to happen once your target is hit? It will go lower..to parity
Regarding trading without stops: If you are certain of your target, trading without as stop as you did last week should not be an issue. It is different for me (I am trading with other peoples money and I have a duty of care) To me that seems to be "investing" in the fall of the Euro, a fall which is essentially unavoidable at this point. We can see that now but when the ECB and IMF was pouring nearly a Trillion Euros into the market, I wasn't prepared to go past 1.3050 I can understand it being a stressful adaptation when experiencing larger than accustomed draw downs, but the trend will eventually give that back to you. I agree Additionally, you need not worry about missing reentry opportunities and large moves in the trend. The 100 pip SL, in partnership with the AH strategy allows me to avoid the big Drawdowns...In this case I just tried something different (the NY strategy) and paid for it dearly I guess what I am asking is how risky can it be to sell the Euro without stops in an environment as we are currently in? Too risky..and unnecessary... to suffer potential devastating drawdowns when the 100 pips SL and AH will work to prevent them
Email 7 (One to think about….)
Ho Wayne how's life? It is good.. every day we wake up is a good day. Much better than the alternative
MESSAGE FROM JACKO 615
It is 3.00 am NY time Tuesday June 1 and the market is at 1.2240
The market was very slow yesterday due to the UK and USA being closed. I am a Seller at 1.2500.
I will be including some excellent emails later today...(as the blog gets towards the end of a month, some members state that it takes them longer to load, so I may start to break the blog into two halves...only 15 days each... for each month. That way I can add more emails and still have quick downloads/uploads)
Last week my target of 1.2500 for a Sell trade was narrowly missed when the market rose to a high of 1.2453. The market was slammed on the head with a hammer on Friday afternoon when Fitch Ratings agency downgraded Spain's credit rating from AAA to AA+, dropping the Euro approximately 90 pips in minutes. The sovereign debt crisis that started in Greece and has now moved on to Spain, is starting to move across the European Union ... and the PIIGS are starting to wilt.Firstly, the The Trillion Euro bailout fund from the EU and the IMF, that caused the Euro to rise 500 pips back in mid-May, is in serious trouble. Mainly because it has failed to instill and maintain confidence in the Euro. But even worse is that, deep in the fine print of that agreement, there are two clauses that will cause the bail-out to fail: The first is that the bail-out will be "immediately and irrevocably cancelled" if it breaches the EU Maastricht Treaty terms that there will be NO bail-outs. .... And there are already cases being brought by some German legal Professors in the highest German courts. The second clause states that if an EU member cannot raise its proportion of the bail-out funding at a cost of less than 5%, it can opt out of the bail-out. It is now becoming clear that Spain will not be able to pay its portion. This means that the burden of the bailout now gets heavier on each of the other EU members. The EU ties that bind all the countries are now getting very stretched and strained.
Secondly, The PIIGS are now trapping themselves with policies of austerity measures that are cutting public spending which is pushing up the unemployment rate (Spain is already at 20+% unemployment even before the new cuts announced on Friday). When all of Europe introduces public spending cuts right across the EU (which is what they are all doing at an exceptional pace), we will see a very large increase in unemployment right across Europe. There is only one outcome...a very deep recession in Europe....and an increase in social turmoil and unrest....and a massive increase in doubts about the benefits of the European Union.
In both cases, the only possible outcome is a radically lower Euro.
I am again keen to get back into this market. As can be seen the Fundamental news announcements are back with a vengeance and are driving this market.
If we look at the Technical charts, using 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 1.3679 (April 13), with the resistance line today at approx 1.3100. As can be seen, we are a long way from the major Resistance line. There is a shorter term line that may be the first target for any rise which is from 1.3679 (April 13) and 1.3342 (April 29) which is currently at approximately 1.2700
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. However, here is some horizontal Support at the 1.2500 area. As I stated last week (and which proved to be the case) "we may see the market try to retrace up from this area on a Technical bounce, but the danger is that an unexpected news announcement could drive it back down through it". (This s exactly what did happen)
The 50% fib line The most relevant 50% fib line is the target retracement number of 1.2900 which is the 50% fib from 1.3679 (April 13) to 1.2144 (May 18).
As can be seen, again this week we are a long way from a Resistance area target. However, I will again be watching the 1.2500 line as potential Support turned Resistance line.
I will again be a Seller at the 1.2500 area. (And again,
I will have a 100 pip fixed Stop Loss. If the Stop Loss is hit, after the price moves another 50 pips past my SL point, I will use the AH strategy. The target price is to hold for the long term target of 1.1000. And to add to the trade each 150 pips. (This is the strategy in its original, pre GFC format))
Edit 8.00am NY time Market is at 1.2166 This market took a beating in early London trade, but it is expecting a reversal in the US session (that is why they are taking profits in the mid London session and sending it up from its lows). The 1.2500 is still possible but I am considering lowering my target to around the 1.2400 area.... I don't want every trade, but I want every trade to be as risk-free as I can possibly make it.Edit 12.05pm NY time Market is at 1.2274. After dropping quickly in early London trading the market reversed sharply on better than expected news out of Europe (especially the better than expected German PMI numbers and German Unemployment numbers). However, I don't expect this "ray of sunshine" from Europe as being anywhere sufficient to overcome the black storm clouds of overwhelming debt linked to inflexible economic systems as shown in the PIIGS economies.
I will again be a Seller at the 1.2500 area, though I am considering reducing it to 1.2400. Edit 8.00pm NY time Market is at 1.2243 The market seems to be bogged down in a medium sized range between 1.2150 and 1.2400 which it has been in since May 15. I will again be a Seller at the 1.2500 area, though I am considering reducing it to 1.2400. I will make a decision when London opens.
.
Emails
Email 1
Actually, I am tried to evaluate how good is a strategy perform by looking at average pips/lot/month, etc. Average pips / Month is a false measure because it doesn't measure the amount of capital used to earn the pips. If you are going to use the capital (or amount invested) measure as your base of the equation, then the only relevant measure is the return on that capital
In the ROI formula: (Gain - Cost)/Cost I Guess gain is the total $ gain. ??? No... the equation is profit / capital invested
But what should I put the 'cost', is it total account value Yes or something else in forex? However, I am more interested in averagely how many pips/lot a strategy can win in a fix period. I don't see the value in that personally, but I will be opening up my Fund blog again later so you can run your measures over the trades in there. It is much more condensed than the traders blog...The Fund blog has only trade results in it Have you said that you will publish your quarterly report? They are the Quarterly reports from the Jackson Fortress Managed fund. I have copied the Report in the traders blog at the end of each Quarter or at the very start of the next Quarter
Email 2
I was not working in this business in the early 90's when the Asian Tigers crisis explode. I was too young and taking care of other things. I know you were in the markets by that time and I would like to know if you can do a recapitulation of how that issue developed? It was similar to the current situation in that some countries (Thailand Malaysia etc) had borrowed too much. The difference to Greece is that the IMF marched in to the Asian countries and imposed very serious controls on the Govts. More importantly, it was done with te express purpose and intent of breaking the restrictions on opening of US banks in those countries. In other words the big US banks influenced the IMF to go in and basically break down their economy so as to allow the US banks to set up..
Do you see similarities with current situation? Yes, but I can not see yet what the end game is for Greece...but I will bet that it has something to do with bailing out the Banks
Email 3
I gotta tell ya .... this market is really starting to get on my nerves...... In fact the whole FX thing is getting just a bit more than I am willing to tolerate anymore.... win a little lose a little, but never really getting anywhere, .. I guess I'm going to take a long break from the bulk of FX,
I decided to let this email "percolate" for a while before I answered it... because I wanted to think about my response..I admit that this can be a frustrating business, but no more than any other.
The basic feature of this business is that you can see immediately where you are right and where you are wrong. In most other businesses it is not so clear cut...For example, in any other business, you can spend $5000 on advertising and you never really know the return on that investment/spend. Yet we happily spend money on those types of expenditures in every business. Similarly, when you put another admin staff member on, you never really know whether he/she justifies the wage cost because it is just subsumed into the overall cost of running a business. In contrast, in forex any expenditure/ trade has an immediate and obvious return. We need to learn to panic less when the expenditure/trade goes against us. Also when a trade goes against us, there is no need to get dispirited .It is not a failure…It is the cost of doing business in this forex business
Similarly, when trading forex as a business, most people aim to be trading say, 5 standard lots at a time after about one year. Now that is equivalent to trading USD $500,000 at a trade. That is no big deal, but buying and selling something for $500K EVERY DAY is what makes it different. If you asked someone whether they would buy a house for $500K today, and if it went down in value by 2%, would they panic and sell it the next day??? (By the way, that's only $10K which is equal to less than the legals etc on buying a property) Most people would laugh and say no...They would hold until the price moved back. One of the things I learned from my visit to NY is that they view their forex contracts with a much longer view. I am moving my trading to do the same.
As for you taking a break from trading, I agree that it is a great idea. Another one of the best features of this business is that you can walk away from it and come back later when you are in the correct frame of mind...The market will still be here. It will be here long after you and I fall off our perches and go to Heaven/ Hell. So when the frustration gets too much...take a break. (That is why sometimes my trading goes quiet...I just need some time and space to release the pressure).
Email 4
I hope by learning and understanding how you think and approach the market, I can see what you are looking at.
· What is your most consecutive losses you have experience so far? 3 or 4
· Where is the source of all your news from? e.g. Bloomberg, Friends, CNN, etc.. Editorials of quality Business newspapers. The Editors are experienced journalists with deep contacts compared to most internet commentators
· When do you expect to see a trend reversal for EUR/USD? When the Daily Resistance line is broken on the 300 Daily chart ..which will be a long while away
· Currently how low do you think EUR/USD will hit? 1.1000 by the end of 2010
· How can you tell if technical analysis is playing out or fundamental analysis is playing out? Watch the news...
· How can you tell if the market is driven by Fear or Greed, or even Panic? Rapid drops in the market Can I say it if the country have a lot of commotion and confusion, that is the spark of fear and may lead into panic? Yes How about Greed, what are the condition to determine that? Greed is more based on over optimism about an outcome. It is not as rapid as a fall from Fear, so it tends to go on for a longer time period
· When you mention about the Bail-out for Greece from IMF, you stated there will be more EUR dollars to be printed. Does that indicate that since there are more EUR currency flowing in the market, the value will depreciate due to the abundant of EUR dollars? Yes...that is the world wide phenomena that is creeping up on us...The constant debasement of all currencies which is keeping the worlds economies ticking over...If they stopped the bailouts (and the printing of money to pay for it all) we would see an enormous Depression...And we still may see one
· Do you think that the protest by the people from Greece will spark the EUR/USD further down? No, that is old news now and has been factored in already. But this will spread to other countries and that will send the Euro down more
· Do you think Portugal will be next in line to be bail out? Probably or Spain
Email 5 (an older one)
Over the last few days I've accumulated a position and wondering how to continue growing it. I've sold @1.3244, 1.3150, 1.3070, 1.2960 (double size) Double sizing at the lower end of the down trend averages you down too much...Try to go in bigger on your initial trades next time 1.2716 (double size) same advice again
I got to point out that my total account doesn't amount to enough to really worry about the sums right now. Thats not the issue...The issue is that you learn properly on the smaller numbers then when you are comfortable, you can go big So I feel pretty save for the moment and the trade has quite some roomnevertheless I obviously would like to expand this position over time.I would also like to just stay in the trade and not attempt to buyback and sell higher again on pullbacks as at the moment this appearsto be a very bearish market and the chances of getting left behindseem substantial. Yes, but EVERY market retraces...!!!!! That is why doubling your exposure on the 4th and 5th trades is too dangerous Would you have any advise on how to add to this sensibly any furtherwithout running too great a risk to end up with no gain at all? Go in harder on the first trade and allow at a maximum two more trades. That should indicate the size of your first trade I've got your long-term target of 1.1000 in mind to reassess whether to close or hold. Treat them as single individual trades and make your decision on EACH of them as to where you want to put your SL on each
Email 6
how many points it is recommended to trail a trend? That depends on the volatility at the time. In most cases a 100 pip TSL is sufficient , but when there are crises, the volatility (as shown by the increase in the Daily Average Trading Range) increases. So you have to make a considered judgement whether to increase the TSL or move to using a Target price
Email 7
I was surprised to read your blog update the other day when you kept your positions open over the weekend and removed the stops. (sorry to bring up bad memories!). Ouch...Yes, I was trialling a strategy that some NY guys use, but I don't have the tolerance for it...Plus, the potential drawdowns are too dangerous. The 100 pip SL paired with the AH strategy is far superior I guess to trade that style you really need to take a MASSIVE step back and let the trade ride? I'm not sure I could do that. It hit my levels of tolerance first attempt , so it was a quick lesson thankfully But interesting to know how the big houses manage their trades. They take big long term positions
Email 8
Dan Tarullo, a Federal Reserve governor, told Congress that the eurozone crisis could cause US banks "to pull back on their lending, as they did during the period of severe financial market dysfunction that followed the bankruptcy of Lehman Brothers". He said that 10 large US banks had $60bn in exposure to troubled European countries – equal to 9 per cent of tier one capital, their core measure of financial strength. The European Banks have massive exposures to the PIIGS...Thats why the German + French govts have set up the Trillion Euro fund.... The better solution is to make the Banks and their shareholders take such a haircut on the loans that they will never venture into such risky portfolio allocations for maybe another 20 years
Email 9
My question is concerning the strategy which you have been using recently ( trading without stop loss and activly managing it around resistance levels) Are you going to reconsider that strategy or u will never use it again and come back to fixed 100 pips SL? I have looked at it very hard and it is difficult to see me using it again. The drawdowns are potentially too dangerous. I would much rather use a simple 100 pip Sl paired with the AH strategy. This completely negates any possibility of a runaway Drawdown that can devastate an account
i think the biggest problem with this strategy is that it may work for long long time and suddenly it fails and you can be hit big time. Yes The second issue is that this strategy work in much more longer perspective ( i am keeping my trend trades on EUR/PLN sometimes more then a mounth and sometimes they are not in profit for some time) Thats fine as long as the leverage is not too high...But as you say, you can still be hit big time
Email 10
I have a few of questions for you.
Euro vs US Dollar (EU) WSJ says officials in the US and Europe concerned about the euro's decline are cautiously talking about intervening in currency markets - WSJ Yes
- Says during the US session, expectations of the prospects of intervention supported the euro. Yes
- According to UniCredit's chief economist Marco Annuziata, the euro would need to decline to about $1.10 in a week or so to lead to action by policy makers. Often, the process of "jawboning" or telling the markets where the politicians want the currency to be is sufficient to move the market..BUT in the current situation, the politicians are trying to manipulate the market too far
- When the euro weakened in Sept 2000, Europe, Japan, UK, US and Canada bought $3-5B of the European currency; Two months later, the ECB bought more euros when the current was at about $0.87. The CB's buy and sell at times
- Notes the Fed's Tarullo suggested the Fed was not pressing for intervention. The US would not be wanting to be seen as getting involved in European matters of currency policy
- According to analysts, China joining any intervention effort would give more credibility to the action, but the WSJ says China is unlikely to join in.China definitely would not be want to be seen as getting involved in European matters of currency policy. It would be totally out of character for China to do that
Email11
You have mentioned in your blog that "the Swiss National Bank intervened in the market by selling the Swiss Franc / buying the Euro". Can you please enlighten me on where did you obtain this information from? So that in the future, I can look out for more of such information. Our brokers followed by Bloombergs and Reuters..But also, just by seeing the size of the /EUR/CHF move, we knew it was a Central Bank that was causing such a huge move
I do see that the market now keep flipping from Technical trading to Fundamental trading. In trading, is it often the case where price movement is base a lot on the news? Mostly in times of crisis
Email 12
when the market is being driven by the news rather than technical analysis, why do you choose not to trade more often and rely on the AH to get back any lost pips? Is it just a case that the markets are too volatile and you're really picky about getting into a trade without it reaching a certain level? Correct...PLUS I have a bigger duty of care because I trade other peoples money This has probably answered my own question?! LOL Yes And Remember, the first rule is Do not lose money.
