Forex Art of War is an introduction to Forex trading. I'll be sharing insights on the Forex market. I'll tell you what it is, its function in the world, and show you opportunity even Forex Traders don't know about.
Forex - An Introduction To Forex Trading
Forex Art of War is an introduction to Forex trading. I'll be sharing insights on the Forex market. I'll tell you what it is, its function in the world, and show you opportunity even Forex Traders don't know about.
USD pushes back a bit ahead of key data
By Saxo Bank
The USD pushed back against the rest of the major currencies outside of the JPY (where another attempt at 100.00 was beaten back) ahead of key US Retail Sales and confidence data.
I’ve discussed the drivers for the strength in EURUSD in recent days, suggesting that the main focus point here is the ECB’s “stand pat” stance relative to the on-going, open-ended QE in the US (with reduction of Fed asset buying possibly delayed by recent weak data) and the wild expansion of the monetary base and BoJ balance sheet in Japan. Another, somewhat related route to EURUSD strength may be from reserve diversification in China, where the huge growth in March reserves of $130 billion may have been stimulated by the enormous USDJPY rally of this spring and which also must have resulted in a good deal of reserve diversification, which has favours EURUSD upside. This same phenomenon could be a driver behind the exaggerated strength in AUD and NZD of late, which has also been outrunning the usual fundamental inputs (interest rates, etc…). But much of this is rear-view mirror stuff, and I’m still looking for a pivot back lower in EURUSD as there are simply too many risks in the pipeline for the EU project as a whole and the ECB is going to respond in one way or another soon.
EURUSD
The 55-day moving average survived as resistance nicely yesterday – let’s see if we can get some follow up momentum lower in the short term that will soften the momentum of the squeeze and begin to confirm a pivot back to the lower range and an eventual break lower. Again, the unfortunate thing is that we’re up against the pesky round 1.3000 level which serves as a psychological magnet for many. By the way – I just did a study of how many days EURUSD has traded intraday at the price of 1.3000 since first reaching that level in 2004 and the result in an astounding 140 days. Compare that with other major round figures: 1.25: 68 days and 1.35: 96 days. This is the heart of the volume weighted price for the last 9 years, it seems.
Elsewhere – interesting to see climax and then rather sharp reversal in NZDUSD. AUDUSD can’t maintain the new highs above 1.0550 this morning, but only sub 1.0500 threatens real reversal potential. EURJPY has slipped below 130.00, and USDJPY couldn’t quite nip the 100 level overnight – more room for JPY bears in the shortest term as government bonds are on a tear this morning despite big sell-off in JGB’s overnight? EURGBP looks soft and short term key support for GBPUSD comes in at 1.5350/60.
Looking ahead
Today we have pivotal US data after an accumulation of rather ugly numbers recently – the US Retail Sales report for March and the preliminary University of Michigan confidence number for April. Do we see strong numbers that shake the trend of recent disappointments or weak numbers that confirm them or mixed data that confounds? The most interesting outcome relative to market positioning and market expectations would be weak data that sees the USD rally – which would suggest the short term potential of pushing the USD weakness is exhausting itself.
Boston Fed holds Dovefest 2013
Today, the Boston Fed is kicking off a two-day event (“Fulfilling the Full Employment Mandate”) that will see major Fed doves Rosengren and Evans speaking, as well as dovish former BoE MPC member Blanchflower. From this event, we can expect to see blueprints for the evolution of Fed policy from here, assuming the US recovery fails to take hold and the Fed then feels compelled to take monetary policy to the inevitable “next level”, whether NGDPLT or the like. By the way, on the subject of the Fed, please see MISH’s classic post on the Fed uncertainty principle. This is unbelievably from April of 2008, before Lehman and well before QE1. It predicts the evolution of Fed policy, which has developed as MISH anticipated. The corollary’s of MISH’s overall uncertainty principle are the most insightful, and should continue to serve as a guide for the Fed’s behaviour from here on out.
Regarding this Boston Fed conference and what it is likely to produce, MISH’s third corollary of the Fed uncertainty principle is most relevant: “Don’t expect the Fed to learn from past mistakes. Instead, expect the Fed to repeat them with bigger and bigger doses of exactly what created the initial problem.” In my mind, the only thing that can interrupt the cycle is a disruptive market event that falsifies the premise of Fed policy, or social tensions and the resulting political pressures from US voters, as the majority of economic participants continue to not see a recovery of any quality. The Republicans are ironically becoming the anti-Fed party (ironically because their staunchest wealthy constituents are benefitting the most from Fed policy), and in this light, this summer there is a huge risk of a disruption in the paradigm of the last five years of Fed policy.
The reason the Fed was so aggressive in easing in late 2012 was purportedly to avoid the risks from the fiscal cliff, but was it also done in the hopes that maximum benefit would be reaching the economy this summer and fall (due to the known lag in policy moves and their actual realization in the economy) as the Fed would have to undergo considerable and possibly uncomfortable scrutiny as either Bernanke faces re-nomination or a new nominee is named. Considering that it is increasingly clear to politicians that the Fed is the enabler of government spending and master puppeteer of asset markets, this event, together with the German election in September, have to be considered the premier two events of the year.
How to Survive a Trading Loss
Let’s face it, trading losses can be tough. No one likes losing money. As every trader will learn sooner or later, trading losses are a routine part of the game. Nevertheless, many traders find it difficult to accept inescapable trading losses.
When We Can’t Accept A Loss . . .
It is the ability to accept the occasional trading loss that can be a key factor in whether or not you become a profitable trader. I am not saying trading losses are encouraged; but how you handle losses may significantly affect your degree of trading success.
Refusing to tolerate and properly handle trades that don’t work leads directly to trading errors. It is the inability to cope with the inevitable losing trade that causes traders to cut winning trades short, move stops in the middle of a trade, hold on to losing trades, average down, and fail to pull the trigger on sound trade setups.
Learning to accept and deal with trading loss may be just as important as making good trades.
Survival Tips – Here are 7 Steps you can take to survive and even thrive when suffering a loss:
1. Write down the trade as it occurred: Don’t sweep the loss under the rug! You need to learn from the loss (that is its value), so write it down. Include how you viewed the market at the time and how the market action and your indicators appeared to meet the criteria for a sound trade setup.
2. Evaluate the trade: Once the trading day is over, go back to what you wrote and see what can be learned. Did you miss-read the market? Was there something you failed to check? Did you take the trade even though it didn’t meet your trade criteria? Or, was the trade setup valid; it just didn’t work out?
3. Use the loss as a learning opportunity: Ask yourself, “What can I learn from this trade?” Is there an insight about market action that can be gained? Is there something about your trading behavior that needs to be addressed? Whatever it is, you have an occasion to grasp something new, and that is valuable!
4. Take immediate corrective action: Do you need to modify your trade setup? Is there a rule for personal discipline needed? Whatever you have learned, take immediate action.
5. Keep your head and attitude right: You always have a choice about attitude. You can accept the loss as an inevitable part of trading and be grateful that you can learn from it, or you can enter a negative, downward spiral of feeling bad, getting down on yourself, and making yourself feel even more miserable. Follow the constructive steps outlined here and stay above all of this.
6. Remember, trading is based in probabilities: Every trade setup has a probability of winning and a probability for loss. Over a large number of trades, a setup with an edge will be profitable. Any given trade is always uncertain. This is the law of trading probability.
7. Turn to others: We all need support. Talk to your trading buddy, mentor, partner or spouse. It helps to unload a bit and you may gain a different perspective.
Put these seven steps into place and you will be on the road to surviving and even thriving from losses.Some great and actionable insights to recover from a loss!
Short, sweet and to the point! – Thanks Gary!
SMA H1 Trading System
Submit by Joy22 (Written by Johan Van Der Westhuizen)
Indicators - 80 SMA
Lot Size - 8
Description
The system works on a 1 hour time frame, when the market moves away from
the SMA I will look to enter a trade towards the SMA.
Chart Setup
Add the 80 SMA (simple moving average) with a setting of shift 1, apply to: Median price (HL/2). I use this
SMA with the1 hour time frame.
System Rules
Short Trades:
1. I look for a rapid, unsustainable bullish movement away from the SMA line of close to or more than 40 pips.
2. Once I spot this move, I look for any signs of the move getting exhausted.
Some times by looking for reversal candle patterns or shorter candles forming, or any other signs of exhaustion.
3. I then enter a bearish trade of 1 lot.
4. I place my target limit anywhere between 10 pips and the SMA line depending
on what I am comfortable with at that stage.
5. I don’t put in a stop loss at this point.
6. If the market continues to move bullish against my trade I do not exit the trade
but once again I wait for it to move more or less 40 pips away and I then look for
signs of exhaustion. Once this occurs I enter a second bearish trade of 3 lots.
7. I will now look to put a profit limit of 20 to 40 pips to cover for the loss on my
first entry and still make profit on my second entry.
8. If the market continues with another bullish run against my trading direction I
will repeat the process but enter the market with 9 lots this time round.
9. I will now put in a Stop loss at the lowest point the market reached and take
out all my open trades if I did not manage to take profit by the time this level is
reached.
Long Trades:
1. I look for a rapid, unsustainable bearish movement away from the SMA (simple moving average) line of
close to, or more than, 40 pips.
2. Once I spot this move, I look for any signs of the move getting exhausted.
Some times by looking for reversal candle patterns or shorter candles forming, or
any other signs of exhaustion.
3. I then enter a bullish trade of 1 lot.
4. I place my target limit anywhere between 10 pips and the SMA (simple moving average) line depending
on what I am comfortable with at that stage.
5. I don’t put in a stop loss at this point.
6. If the market continues to move bearish against my trade I do not exit the trade
but once again I wait for it to move more or less 40 pips away and I then look for
signs of exhaustion. Once this occurs I enter a second bullish trade of 3 lots.
7. I will now look to put a profit limit of 20 to 40 pips to cover for the loss on my
first entry and still make profit on my second entry.
8. If the market continues with another bearish run against my trading direction I
will repeat the process but enter the market with 9 lots this time round.
9. I will now put in a Stop loss at the lowest point the market reached and take
out all my open trades, if I did not manage to take profit by the time this level is
reached.
Short Trade Examples
Example 2
Rapid movement started away from SMA at point A to point B on the chart below
l was looking for a short trade.
Reversal signal occurred for me at point B Inside candle
I would have entered short at the 99.365 Red line with 1 lot
I would have set my take profit at the 99.007 blue line
The Take profit blue line was met at C
Total profit = 36 pips
Long Trade Example 2
A Rapid movement occurred downside of the SMA from point A to B.
A Reversal pattern formed at Point B Inside candle
I would then enter the market at the .79317 black line
My take profit zone would be from.79417 to the SMA line.
I would take profit when the price crossed the blue line at Point C: .79812
Profit: 50 pips
Indicators - 80 SMA
Lot Size - 8
Description
The system works on a 1 hour time frame, when the market moves away from
the SMA I will look to enter a trade towards the SMA.
Chart Setup
Add the 80 SMA (simple moving average) with a setting of shift 1, apply to: Median price (HL/2). I use this
SMA with the1 hour time frame.
System Rules
Short Trades:
1. I look for a rapid, unsustainable bullish movement away from the SMA line of close to or more than 40 pips.
2. Once I spot this move, I look for any signs of the move getting exhausted.
Some times by looking for reversal candle patterns or shorter candles forming, or any other signs of exhaustion.
3. I then enter a bearish trade of 1 lot.
4. I place my target limit anywhere between 10 pips and the SMA line depending
on what I am comfortable with at that stage.
5. I don’t put in a stop loss at this point.
6. If the market continues to move bullish against my trade I do not exit the trade
but once again I wait for it to move more or less 40 pips away and I then look for
signs of exhaustion. Once this occurs I enter a second bearish trade of 3 lots.
7. I will now look to put a profit limit of 20 to 40 pips to cover for the loss on my
first entry and still make profit on my second entry.
8. If the market continues with another bullish run against my trading direction I
will repeat the process but enter the market with 9 lots this time round.
9. I will now put in a Stop loss at the lowest point the market reached and take
out all my open trades if I did not manage to take profit by the time this level is
reached.
Long Trades:
1. I look for a rapid, unsustainable bearish movement away from the SMA (simple moving average) line of
close to, or more than, 40 pips.
2. Once I spot this move, I look for any signs of the move getting exhausted.
Some times by looking for reversal candle patterns or shorter candles forming, or
any other signs of exhaustion.
3. I then enter a bullish trade of 1 lot.
4. I place my target limit anywhere between 10 pips and the SMA (simple moving average) line depending
on what I am comfortable with at that stage.
5. I don’t put in a stop loss at this point.
6. If the market continues to move bearish against my trade I do not exit the trade
but once again I wait for it to move more or less 40 pips away and I then look for
signs of exhaustion. Once this occurs I enter a second bullish trade of 3 lots.
7. I will now look to put a profit limit of 20 to 40 pips to cover for the loss on my
first entry and still make profit on my second entry.
8. If the market continues with another bearish run against my trading direction I
will repeat the process but enter the market with 9 lots this time round.
9. I will now put in a Stop loss at the lowest point the market reached and take
out all my open trades, if I did not manage to take profit by the time this level is
reached.
Short Trade Examples
Rapid movement started away from SMA at point A to point B on the chart below
l was looking for a short trade.
Reversal signal occurred for me at point B Inside candle
I would have entered short at the 99.365 Red line with 1 lot
I would have set my take profit at the 99.007 blue line
The Take profit blue line was met at C
Total profit = 36 pips
Long Trade Example 2
A Rapid movement occurred downside of the SMA from point A to B.
A Reversal pattern formed at Point B Inside candle
I would then enter the market at the .79317 black line
My take profit zone would be from.79417 to the SMA line.
I would take profit when the price crossed the blue line at Point C: .79812
Profit: 50 pips
Bella System Trading System
1. Open a 30 min chart EUR/USD. Insert RSI (14), Stochastic Oscillator (14,3,3)and EMAS 5 and 13.
2. We have to watch for a divergence between the price and the RSI or the Stochastic.
This is very important, because sometimes we don´t see a divergence between the price and the RSI, but the Stochastic show divergence compare to the price, and viceversa.
3. Once we saw the divergence we have to wait for the cross of the EMAS to go long or short.
4. I prefer to open the position with 2 lots and close half the position with 20-30 pips of profit, and move my sl to breakeven with the other lot, in case that the market begin to
trend, we can win more pips, and if the price begin to go against you, you keep the 20-30 of the other lot.
5. Always put sl of 20-25. This strategy presents like 10-12 oportunities in a month and it is 90 % accurate.
6. Avoid to use this strategy when is big news day.
7. In the 15 min chart I had some bad signals and in the one hour chart we enter late to the party of pips. This system can work for the GBP/USD too, but your stop have to be
like 30-40 pips.
2. We have to watch for a divergence between the price and the RSI or the Stochastic.
This is very important, because sometimes we don´t see a divergence between the price and the RSI, but the Stochastic show divergence compare to the price, and viceversa.
3. Once we saw the divergence we have to wait for the cross of the EMAS to go long or short.
4. I prefer to open the position with 2 lots and close half the position with 20-30 pips of profit, and move my sl to breakeven with the other lot, in case that the market begin to
trend, we can win more pips, and if the price begin to go against you, you keep the 20-30 of the other lot.
5. Always put sl of 20-25. This strategy presents like 10-12 oportunities in a month and it is 90 % accurate.
6. Avoid to use this strategy when is big news day.
7. In the 15 min chart I had some bad signals and in the one hour chart we enter late to the party of pips. This system can work for the GBP/USD too, but your stop have to be
like 30-40 pips.
