Thoughts from a FX Trader

More Eurozone erosion?

2012-01-14T09:47:00.000+10:00

Any attempts of an upward move this week were well and truly thwarted yesterday as the PA tail spinned only moments after reaching the 1.28770 level. Seemed like even the resulting positive European trade balance figure of 6.10B was insufficient as this was severely overshadowed by the swift downgrading of France, Italy, Spain, Cyprus and Portugal with the latter receiving a BB near junk rating by Standard and Poor's, this of which is concisely covered by yesterday's BBC world news report on the incident.

EURUSD-130112

2012-01-13T10:31:00.019+10:00

Given the gradual upward movement of the single currency Euro against it's Greenback counterpart this week this is now revealing itself be an ideal setup for further upward advances; especially since the prices action is above the 60 SMA on the H1 chart and looks like an eventual crossover will

occur on the H4 chart at 1.28484.I strongly suspect it's next closest port of call will be the the 1.29 level at the very least. This will be given more credence if Europe's trade balance forecast increase for the month of December 2011 holds at 0.70B, due to be released at 10:00 hours GMT.

3 ducks in action 2

2012-01-05T19:15:00.002+10:00

Well the resulting trade was a success, I do expect the euro to sink further what with more troubles within the eurozone. I suspect the next move for the PA is towards the next level of support at 1.26541.

3 ducks in action

2012-01-05T15:02:00.008+10:00

Here we have the 5M, 1H and 4H eurusd charts in consecutive order, PA at time of posting is below the 60 SMA on all 3 charts. A pending set and forget short (sell stop) trade being set to activate once PA reaches 1.28961. TP has been set to close trade at 1.28560 which is a main support level indicated on the H1 chart. There will (if reached) be an inevitable retracement once this is reached. At this point and if all goes well the trade will be closed and we can then look at placing another set and forget pending trade for any further downward movement should this occur. This simple trade setup has a 30 pip SL since the trade is being performed on the 5M chart which should prove more than adequate. All that needs to be done is see how the trade pans out.

3 ducks on a forex reprisal

2011-12-22T12:37:00.002+10:00

My inauguration into the world of currency trading has been an absolute financial baptism of fire, many manual methods used and applied along with a handful of expert advisers that have failed to meet expectations, these of which I will not mention any names however those that have followed this blog to any degree will know. Having said such though I believe also that just like a tradesmen who should never blame his tools for bad workmanship I also have had to deal with my own shortcomings as a trader in terms of mindset. If there is one methodology that does have any merits it must be the 3 duck method as endorsed by Andy Perry aka Captain Currency whom of which I have mentioned before as you would know. Simple methods always work the best and nothing could be more so than this one. If your looking for profit making consistency then look no further.

My only problem was not being able to watch any active trades since I work during the European/UK market open so often ended up being taken out with a small loss; since one needs to terminate the trade (and keep your profits made) when the PA crosses above or below (depending if your long or short on a trade) the 60 SMA. this presented a problem since I wasn't at the trade station. Problem solved - after a Google search I came across a handy EA that would do just that, close the trade once the price action made a MA crossover. This particular EA is now indispensable to me, it's called the OrdMgrSL.mq4. I will reiterate it does not open any trade(s) it only closes them exactly on the mark. Anyone interested just Google and you will find it, I actually came across it through a forex forum group, but failing this if you email me at davidwilsonholmes(at)yahoo.com and put ordmgrsl in the subject line I will attach it to a reply.

Before I forget I'd like to wish everyone a very festive Christmas.

Trading results to date

Forex find

2011-10-16T13:14:00.001+10:00

A substantial degree of success in forex is product knowledge, especially within the formative stages when your setting out on your forex career. There are as a consequence a few sites that catalogue such sites of importance as to the degree of their usefulness. At the top of this list is Forex On Top which although is a good site mainly concerns a sites popularity in terms of it's overall net ranking not only within it's own site but the individuals Alexa rating. Plus it contains many of the international forex brokerage houses. One site in particular that caught my attention was Online Forex Trading which doesn't show all the sites, but more so a few of the more information and educational based sites which is more to the point of this posting. Each site reviewed not only has a ranking by popularity but a more in depth description to it's primary function, complete with the pros and cons of said sites. I guess the derivatives may include sites that monitor sites dealing with the fundamentals, that is to say forex news sites such as Dailyfx which happens to be my favourite when it comes to global finance news and the calender of events which effect the market. Next you have forex forums which are as we know community based sites which deal with the exchange of information and idea's and act like large think tanks. The top of this list would have to include the ever popular Baby Pips which is an absolute must for forex traders of all degrees of competency, followed by the Forex Peace Army which I believe should be called Forex Police Army since their main objective is as a watchdog on brokers and robot trader vendors that may attempt any misdealings and any other inappropriate behaviour such as attempted scams.

Alive and still kicking

2011-10-04T12:46:00.002+10:00

I have been away from the blog for awhile admittedly but not gone. More so concentrating on a battered and bruised account and saving it from a horrible death such as a margin call. No more are the droid(s) in control but instead adhering to the methodology of Captain Currency and his 3 duck system. This of which has in actuality saved my bacon.

A couple of changes to the blog have been implemented, first of which is getting rid of the heady graphics which I discovered just interfered with some of the text especially the hypertext, not much point if you cannot see important links since I put such effort into setting them up. Another is the elimination of the monthly progress charts, weekly pip tally and active trade shots, instead just a link to the fxjunction profile page which says it all automatically which is ever so much easier. This also frees up time purely for blog posts. Indeed fxjunction does all of these.

We have noticed a monumental shift in the majors recently with some megatrends (mostly to the downside) which have given rise to some ballistically profitable moves should you have noticed them, mind you, you would be seriously myopic if you hadn't. One look at the decline of the Euro for instance on the daily chart makes your jaw drop with absolute awe. That's not a downward trend move..... it's a friggin landslide! Will the Euro drop to parity or even worse fall down further still against the Greenback, Let us not forget that 11 years ago in October of 2000 the Euro hit 0.82250 against the U.S. Dollar. Could this happen again?

Stats and activity feed

Is Forex a dirty word?

2011-08-20T12:38:00.002+10:00

Recently I came across an interesting article entitled "The G-7 Forex Intervention Is A Perfect Example Of How Manipulated The Global Currency Market Really Is" by Michael Snyder. I have to confess it made for interesting reading but was by no means a revelation. The examples used within his article in respect to the BOJ intervention in agreement with other members of the G-7 to clearly participate has been voiced in various media sources. On the grand scale though of a market place in which the daily turnover is in the order of 4 trillion dollars we the private investors make very little noise' compared to Governments and larger banking institutions that throw billions in one hit into the market place. Even with such horrendous amounts of money funneled still only moves the market for a given time depending on sufficient orders continuing to keep the momentum going. Is this a good or bad thing? What would happen to the market (and this is purely hypothetical) if no large institutional money was put into it. The result would be very little forex movement whatsoever. So given this, is it such a bad thing? Not necessarily, just as you cannot go anywhere in a parked car, if the market didn't move we wouldn't make (or lose) money either. In fact forex would become a total waste of time. The bottom line is we need the big player intervention so we can ride on their money (which fuels the forex trends).

Percentage gain/loss as of 13.8.11 = +6.56%
Profit Factor = 0.92

Trading uncertainty

2011-08-14T17:22:00.000+10:00

To say this weeks trading activities has been erratic is a gross understatement, putting it mildly it's been utter hell, all that's happened since the 2.8 being daily corrections within the market. Quite frankly this is a week to forget.

Percentage gain/loss as of 6.8.11 = -32.39%
Profit Factor = 0.92

Where to from here?

2011-08-06T16:11:00.002+10:00

With the US Government caught between a rock and a hard place on whether to raise it's debt limit or impose crippling cutbacks on Government spending could not have been an easy call. Either way there is only carnage in sight for not only the US but for the rest of the worlds nations. Unless anyone has been living under a rock since the 2.8.11 the full brunt of the aftershock sent a tsunami through the global financial system.which has put the media spin doctors into overdrive into diligently informing us all of how bad things really are are. Plus to add insult to injury the US has lost it's once prized AAA rating and downsized to a AA+....ouch! How do you begin unscrambling a global mess like that? I do love it how some individual boffins come forward in the wake only to be heard screaming we told you this would happen. How is this supposed to help when the proverbial shit has finally hit the fan? What we need now are forward rational thinking folks in power, how about empowering Ron Paul into the Presidency seat for starters? It's a heavy burden to put on such an individual but how could he do any worse damage? This fiasco didn't happen overnight, it's been a ticking bomb for some time now.

Here in Australia we are being being lectured by our illustrious Treasurer Wayne Swan that due to the strength and stability of our economy all is well especially with our mining export industry, whilst Prime Minister Julia Gillard is still attempting to shove the Coalition Carbon Tax down the throats of an already unwilling populous. All this political rhetoric it seems is a only a diversion for any plan B needed in the present global situation.

Have a good weekend everyone....

Percentage gain/loss as of 30.7.11 = -3.20%
Profit Factor = 0.94

Quotable Quotes

2011-07-30T11:53:00.003+10:00

"I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs". ~ Thomas Jefferson, (Attributed) 3rd president of US (1743 - 1826)

Getting there

2011-07-30T11:43:00.000+10:00

This week saw some reasonable gains and what I have discovered is that diligent trading using the Awesome Oscillator on the 4H chart with the EURUSD in particular is a very sound methodology for making reliable steady gains. No system or method is ever entirely foolproof in the forex world; all that is important is that wins outstrip your losses over the long haul. What I find so appealing it it's simplicity, however it always pays to be mindful of relevant information such as major reversal candle signals on strong S/R levels and not entirely ignoring important fundamental news events. Adhering to these can and does give you an overall edge. Of course last and by no means least of which is Risk Management which is critical to keeping you in the game.

Have a good weekend everyone..... : )

Percentage gain/loss as of 23.7.11 = +7.22%
Profit Factor = 0.94

Progress Chart

2011-07-30T11:11:00.004+10:00

Previous
July EOM percenatage gain/loss = +1.16%

Global Financial Crisis - Part 2?

2011-07-28T11:11:00.010+10:00

Will the U.S. dept crisis embark the world into yet another abysmal massacre sending us all into part 2 of a regrettable continuation of the geopolitical financial mess we are all in? I am no economist or an financial expert by any means, however the way I see it is that raising the dept ceiling over 14T when this itself cannot be paid off makes no sense at all, on any level if dept cannot be paid how does more dept solve the situation? Isn't the definition of insanity doing the same as you always do and yet expect a different result? This whole dept increase way of thinking is akin to placing a band aid on a gaping wound, ultimately it would only just delay an inevitable meltdown of the US economy wouldn't it?. Now this would be ugly, can't say I like this for one moment. Certainly as far as the financial markets are concerned an uneasiness is starting to become evident, no less so than in the forex sphere. I do believe when the results do come through the markets will react accordingly and the market movement on the whole will make the activities of the NFP seem pale and into insignificance by comparison.

There is only one consultation from all of this impending fiasco that takes us headlong into the day after, during tumultuous `shake and bake' financial activities such as this there is always a mass transfer of wealth. The only question is who will be the victors and who will be the losers? Maybe we might see some massive trends in forex, there could be some opportunity to ride a monumental trend wave. Just keep your eyes locked onto the market.

I have posted a survey at top right of the blog page, please take the time to vote as I am real interested to know the general consensus on this affair.

Quotable Quotes

2011-07-24T12:47:00.000+10:00

“I see in the near future a crisis approaching that unnerves me and causes me to tremble for the safety of my country. As a result of the war, corporations have been enthroned and an era of corruption in high places will follow, and the money power of the country will endeavor to prolong its reign by working upon the prejudices of the people until all wealth is aggregated in a few hands, and the Republic is destroyed. I feel at this moment more anxiety for the safety of my country than ever before, even in the midst of war.” ~ Abraham Lincoln - In a letter written to William Elkin

Turbulent times

2011-07-24T11:54:00.001+10:00

These are indeed interesting times that we now live in, ultimately it is a crossroad reached that will define the future and everything it holds, whether it be for the benefit of all citizens of every nation, or otherwise just for the wealthy elite of this planet. Is the glass half full or half empty? I am not quite sure anymore. English Professor Joel Shatzky authors a grim reality check of our current situation in his article entitled `A Tale of Two Nation' This is certainly a scenerio that paints a picture of grim forebode for not only the future America but all of humanity, a brave new world that most of us would not like to eventuate. God forbid I only hope that this does not come to pass.

Take care one and all until next trading week.

Percentage gain/loss as of 16.7.11 = -5.37%
Profit Factor = 0.93

Out of the valley of darkness

2011-07-16T11:41:00.003+10:00

This week saw a good turnaround and managed to pull up the account by it's bootstraps to produce a sizable profit increase. I have finally settled upon a workable methodology that holds out well even on back tests. It is by no means revolutionary and I did actually mention it in my last posting. It simply requires no more than an AO indicator placed on a H4 chart of any currency pair, however personally I do prefer the EURUSD. Trades being activated by the 2nd histogram bar of a zero crossover. In my setups I stick to a 80 pip SL and a 50 pip trailing stop. and only ever execute buy trades on the green histogram bars in the positive and place sell trades on the red histogram bars in the negative. One will find that red bars in the positive and green bars in the negative are generally only re tracement corrections within the market place so therefore should be avoided. In the above example screen shot is this weeks EURUSD chart on a H4 time frame. The red line signifies the sell whilst the blue line is where the trade would have been closed. This particular trade would have yielded 144.7 pips profit.

Have a good weekend everyone.

Percentage gain/loss as of 10.7.11 = +11.84%
Profit Factor = 0.94

Trading live on FXJunction

2011-07-10T13:15:00.002+10:00

This last week all trading activity has become totally transparent on my profile page at FXJunction. One of the best things I do like about this site is that unlike the plain history stats one finds in the MT4 history FXJunction gives you a very concise statistical breakdown of all your trading activities such as a Instrument Distribution pie graph of all your traded pairs broken down by percentage. The trading summery by time period highlights also your profitability, trade win/loss ratio, average duration of trades, pip totals and percentage gain/loss on the collective traded pairs, plus much more. It really is a good forex business focusing tool.

This week I have been checking out the performance of trading with the AO on a H4 EURUSD with 80 pip SL and engaging a break even after a 50 pip positive gain has been achieved, and quite frankly I am more than astounded by how well it works, I sure wish I had a fully programmable AO EA that would not only activate a trade on a zero crossover but close the trade once the histogram bars changed colour eg close on the first red bar on a buy trade and the first green bar on a sell trade plus include apart from the usual SL and TP level either a break even or trailing stop switch. Is there any reason why I cannot find such an EA? I am deadly serious in saying that if one exists it would be the ultimate killer EA. Does anyone know of the existence of any such EA?

Take care everyone and enjoy the rest of your weekend.

Percentage gain/loss as of 2.7.11 = -3.32%
Profit Factor = 0.93

Progress Chart

2011-07-02T15:07:00.000+10:00

Previous
June EOM percentage gain/loss = -25.53%

FXJunction

2011-07-02T14:55:00.001+10:00

If there is one thing more important than personal accountability for ones actions it has got to be peer review accountability. It is for this reason that I have linked up my live account with fxjunction.com, which is a social network site dedicated to forex traders whether they be live or demo accounts. This is done by adding their fxjunction bridge EA on to your platform which then synchronises with there server to give a live data feed on all forex transactions executed. My page can be seen by clicking on this profile link . The account though will not show up in fxjunction until the market recommences on Monday at which point it will then be syncronised and show up on my profile page.

The Greeks caught between a rock and a hard place had my sympathies this week. Certainly seemed like from what I have heard in the news is that the austerity measures imposed are far from reasonable in order to get this further bailout loan package from the EU and IMF. It looks to me that the overall picture looks ugly either way. Hard times or all out bankruptcy! What a choice, but clearly it has also been shown that the Greek populous are not happy with the situation at hand of having the sovereignty violated in such a callous manner. I don't think for one moment despite the markets overall optimism on the deal that this will be the last of the Greek calamity affair, further ramifications can be expected, history shows us that people will only be pushed so far, and once the outer limit is reached then all hell breaks loose.

I know it is late in coming but as soon as I have finished with this post I will add last months progress to the blog. Trust me it is not a pretty sight, and I hope the situation it now netter managed and under control.

Take care everyone, and catch you all next week.

Percentage gain/loss as of 26.6.11 = -8.99%
Profit Factor = 0.93

Daily candle straddle

2011-06-25T12:09:00.006+10:00

Finally this week I managed to stabalise the account from any more serious losses, discipline on my behalf is now the catch phrase I adhere to with rigorous regime. I even made a point of putting down in a notepad file (which I keep on my desktop as a shortcut) to keep me focused the exact methodology of trade entry, which I have cut and pasted in it's entirety below.

__________________________________________

DAILY SCHEDULE

1. Open D1 eurusd chart
2. Place pending buy and sell order at the high and low plus 10 of the previous days candle.
3. Set SL @ ADR/2 w/ trailing stop of 50 pips.
4. If SL gets taken out on either buy or sell order before the daily candle is finished then
replace pending order at the same high/low.
5. First duty of the new day is to clear out any existing orders.
6. Repeat process from 2.
______________________________________

This is as simple as trading gets, with the only indicator being used is the Fibonacci re tracement tool. Here is a screenshot of what Mondays pending orders look like:

Colour me naive if you so wish when I say that I believe this to be an almost foolproof (as you can possibly get) method of ending the week with a positive result in terms of both pips and dollar amount profit. Will it win every trade?, absolutely not, but in saying this and adversely cannot lose every trade. It will not be a big money spinner. I reasonably expect a conservative 10 - 15% ROI over the course of the month; and from my way of thinking a gradual steady return is far more appreciated than a forex roller coaster ride of wins and losses. All it takes in time investment is less than 5 mins a day.

Have a good weekend one and all, and thank you for dropping by.

Percentage gain/loss as of the 18.6.11 = +1.87%
Profit Factor = 0.93

When will it end?

2011-06-18T13:30:00.003+10:00

With half the account now obliterated there are times I begin to question my own judgement on matters of trade decisions. Clearly the likelihood of a balance restoration by the end of June is undeniably questionable. The only good part of this is the hedging of my overall tax due to the losses incurred, but this in itself does little to ease the situation, as forex is not (to me anyhow) about how much to reduce ones tax, rather a strategy about gains in what can seem like an ocean of chaos and uncertainty.

Well moving away from my own shortcomings the EURUSD which I had expected to reach it's 100% fibo level did not entirely eventuate, even after collapsing below the 61.8 level and re-tracing roughly at the half way mark. This situation naturally isn't proving that the EEC is doing better than the US but rather risk aversion taking hold once more. Trader loyalty is thin on the ground when monetary gain is concerned. Will there be a turn around next week in this pair in favour of the greenback?, who the hell would know, after all mass psychology can be a fickle beast that runs on the merest whiff of fundamental optimism.

I came across an interesting trading system the other day called the Pallada Trend Following System designed by Tradeways.org, have to confess it certainly looks intriguing to say the least. If you Google Pallada in respect to reviews it looks as though there is a lot of praise on the major forex forums for this trading methodology which has been around now for some time now. Versions for MT4 which is available as a semi and fully automated version are available at no cost however the newer incarnation designed specifically for MT5 has a cost attached. Below is a screen shot of the Pallada interface:

Have a good weekend everyone.

Percentage gain/loss as of 11.6.11 = -12.62%
Profit Factor = 0.93

Change of direction

2011-06-11T14:54:00.004+10:00

This week has proved to be far better, with only a slight setback in the beginning of the week then to finally end with a profit albeit a small one. Whilst looking for a suitable OCO EA this week (which I couldn't find by the way, at least not exactly what I was looking for) I happened to come across a simple straddling technique whereby pending trades are set for the high and low of the previous D1 candle. This is best done about half an hour before the new outside D1 candle starts. Very little is used in the form of indicators except for the usage of fibo re tracement levels. I confess to liking this low maintenance method as things are quite busy for me at work right now and this can be setup before I start.

This is what the pending order setup looks like for the start of Monday's trade. As we can see the in this D1 EURUSD chart the PA reached it's 50% fibo level on the close of last weeks trading. Where does it go from here? Personally I believe the direction is bearish. Why? Firstly the outside MN candle donates a very strong bearish hammer candle as shown here. Secondly the PA is now below the (the ducks system) 60 SMA on the H4, H1 and has just edged below on the M5. Therefore I strongly suspect the Euro to drop to 1.39 by the end of next week which would bring it in contact with the 100% fibo re tracement level.

Have a good weekend everyone, no matter where you are : )

Percentage gain/loss as of 4.6.11 = +2.11%
Profit Factor = 0.94

Turn around time

2011-06-04T16:06:00.002+10:00

The dust has settled on a very volatile trading week, which has been extremely bad on my behalf. A self assessment was needed by yours truly before I am to blow myself out of the water. I was using the 3 duck technique, and even though it was still working out ok it was proving difficult due to volatility making it very hard to equate an appropriate and yet reasonable SL distance. What was needed was a volatile friendly technique approach Looking through my blog I re-read the results for the hedging stratergy'; why did I stop using it? It was producing reasonable results given it's simplicity. So I have begun using the sure-fire hedging strategy as the solution to all this recent volatility. This technique dues require simultaneous buy/sell setups, one active and one pending so may not be suitable for everyone since hedging is not allowed in places especially on US brokers.

So for me the challenge is now on, with two trade setups for the beginning of the European/UK session and two for the beginning of the US session. The only downfall to this method is that MT4 does not incorporate an OCO, which would be extremely useful on unmonitored trades. Is there such a thing as a OCO EA? Maybe I should checkout on the net if one exists. It would certainly be of help.

Have a good weekend until next week when the games begin.

Percentage gain loss as of 28.5.11 = -20.11%
Profit Factor = 0.94

Progress Chart

2011-06-01T23:52:00.001+10:00

Previous
EOM percentage gain/loss = -10.60%