ArrowFX | Trading the Market Rhythm

EURUSD Focus: Break Below 1.36

noreply@blogger.com (Ivan Sonavia) — Tue, 07 Jan 2014 15:35:00 +0000

EURUSD H4 Chart

Right!

My SELL order on EU was filled:

Entry : Short @1.36
1st Target : 1.3560 (previous low)
2nd Target would be 1.35 to make 1:2 R/R

SL @1.3660 which is above previous high.

EURUSD H1 Chart

Forex Weekly Market Rhythm | January 6, 2014

noreply@blogger.com (Ivan Sonavia) — Sat, 04 Jan 2014 09:24:00 +0000

AUDUSD H4 Chart | January 6, 2014

Right!

This is a post about weekly forex market rhythm, for January 6 2014. Because trading market rhythm is based on 'anticipation' on what the price might do in near future by watching closely what they are doing right now.

AUDUSD H4

Above is AUDUSD H4 chart, which shows many clue about the never ending fall of AUDUSD. However, the move seems to hit brake right now, and when looking at the consolidation area over there, obviously traders aren't sure where to go right now.

Above, the price met significant resistance of SMA 200 (at around 0.9015). Below, there are important support levels too. We can see it on the H1 Chart.

AUDUSD H1 Chart | January 6, 2014

EURUSD

Finally, EU lost its stand against the bear. After several brave attempts to breach 1.39, EU failed dramatically and went sub 1.36. It is running at around 1.3580 at the moment of writing.

EURUSD H4 Chart | January 6, 2014

On H4, the EU show strong downward push. These are main points from Reuters:

Yen rises versus euro as investors take profits
Fed Bernanke gives upbeat assessment of U.S. economy in coming quarters
Euro extends slide after second-half rally

EURUSD Daily Chart | January 6, 2014

And this is the fundamental view from my friend, Rangga Cipta, an economist:

"On the first day of trading in 2014, the U.S. stock market was overshadowed by the great sell off . Early this morning the Dow Jones and the S & P 500 are both closed down 0.8 % . A few moments earlier , also marked the closing weaker in European stock markets .

Attenuation occurs after U.S. economic data last night announced better than market expectations . Initial Jobless Claims downs , more rapid growth rate of the ISM Manufacturing and Construction Spending indicates the pace of U.S. economic recovery is excellent.

It responded by strengthening Dollar Index was 0.65 % while the EUR/USD trimmed 0.66 %.

However , the level of U.S. government bond yields go up tenor 10 years not follow the pace of economic optimism in general though still in a rising trend . Please note that throughout this January , the Fed will reduce the number of purchases of U.S. government bonds USD 45bln to be USD 40bln.

Asian stock markets rose yesterday afternoon until closing sharply. Jakarta Composite Index become one of the fastest gains responds large surplus in the trade balance in November. However, there has been no significant change in the exchange rate. Exchange JISDOR BI still weakened 0:43 % to 12.242 1mth NDFs despite successful rate edged up to 12.219."

Happy New Year 2014

noreply@blogger.com (Ivan Sonavia) — Tue, 31 Dec 2013 14:56:00 +0000

Beautiful Sunrise | Ricefields BALI

ArrowFXTrading mengucapkan Selamat Tahun Baru.

Semoga damai sejahtera, kemakmuran dan sukacita menyertai Anda dan Keluarga di tahun 2014

Tuhan Memberkati

Forex Weekly Market Rhythm | December 23

noreply@blogger.com (Ivan Sonavia) — Sun, 22 Dec 2013 13:14:00 +0000

EURUSD Daily Chart | December 22, 2013

Right,

Today I am posting about forex market rhythm on EURUSD, USDJPY and AUDUSD

EURUSD went down after the Fed announce the tapering. But the volatility and range of the move
somehow moderate. On the daily chart, EU still supported by the 21 day EMA (1.3665). Fail to close below will send the EU higher on Trend Continuation move.

EURUSD Weekly Chart | December 22, 2013

While on the weekly chart, I am expecting the EU to form the right shoulder both on MACD and the candlestick. Targeting 1.35.

USDJPY H4 Chart | December 22, 2013

USDJPY - Still on the uptrend, targeting the median line. Supported by the EMA 21 (103.80), and close above EMA 8 (104.17) may send the UJ to 104.80.

AUDUSD H4 Chart | December 22, 2013

AUDUSD - is on key support level (0.88). There is a chance that the trend will reverse soon.

Current key resistances are:

Round Number - 0.90
21 day EMA - 0.9050. Fail to break will resume the downtrend.

AUDUSD Daily Chart | December 22, 2013

Salam sukses dari Pondok Labu, Jakarta

Arrow

How to Day Trade with a Small Account

noreply@blogger.com (Ivan Sonavia) — Mon, 16 Dec 2013 16:58:00 +0000

Interesting video about how to start trading with small amount of money.

If you haven't start trading yet, and ready to open an account base on your brokers suggestion, then you will need to take a look. Without any experience, your failure in day trading is a surefire.

This video will show how hard it is to make money on day trading. But, if you persistent enough, it will show how to compound your money day trading.

Trading is never easy!

Price Action Forex Trading Strategies By Nial Fuller (Learn to Trade the Market)

noreply@blogger.com (Ivan Sonavia) — Sun, 15 Dec 2013 16:36:00 +0000

In this great video by Nial Fuller, we can learn about:

Basic principles of drawing the trendline
Finding support and resistance
Finding point of confluence (point where Nial is convenience enough to enter the market)
How to enter a trade by using risk vs reward

In this less than 10 minutes video, we will be introduced to a price action trading strategies.

Salam,

Arrow

Weekly Forex Market Rhythm | December 13, 2013

noreply@blogger.com (Ivan Sonavia) — Sat, 14 Dec 2013 02:28:00 +0000

EURUSD Daily Chart | December 13, 2013

DOLLAR RISES ON CHANCES OF FED TAPER

The U.S. dollar hovered near a five-year high against the yen and rose against the euro on Friday, while global equity indexes slipped on growing concerns the U.S. Federal Reserve could surprise investors by scaling back its stimulus as early as next week.

While market participants in general expect the Fed to start paring back its stimulus no later than March, a growing number expect a reduction in the Fed's asset purchases may be announced at the central bank's Dec. 17-18 policy gathering.

In the daily chart, the EURUSD is forming a double top. It is a high probability reversal signal.

It already hit 1.38 round numbers, it is possible that the EU want to catch breath before rallying further.

A pullback to the midpoint EMA 8 and 21 is seen.

GBPUSD Daily Chart | December 13, 2013

TAPER FEAR NEAR THE TRENDLINE

On the chart above, is shown that the GBPUSD persistently tried to break above the trendline (around 1.65). The Fed tapering fear will keep the GU under it for a while. Any surprise on the Fed's 2013 last meeting next week may sent the GU above the trendline, or more likely, down to 89 day SMA at around 1.5990.

The nearest support seen at 1.6250 and 1.62 round number.

USDJPY H4 Chart | December 13, 2013

The USDJPY uptrend still intact. Seen in the H4 chart, the price is moving along the median lines.

89 SMA also show solid support for the USD.

With the imminent Fed tapering issue next week, we still see the US strength and a probability that the price may zoom above the median line, and targeting the upper line (around 105).

However, a break below the lower median line, and SMA 89 will send the UJ down to 101.50, the midpoint of SMA 89 and SMA 200.

Salam,

Arrow

Weekly Forex Market Rhythm | December 6, 2013

noreply@blogger.com (Ivan Sonavia) — Sun, 08 Dec 2013 01:45:00 +0000

EUR/USD Daily Chart | Dec 6, 2013

NFP stronger than expected, but was not enough

Euro zone bonds rose across the board on Friday, recouping some of this week's losses as U.S. jobs data came in above forecast but was not considered strong enough to prompt an immediate scaling back of U.S. stimulus, and as the European Central Bank gave no hints that further monetary easing was imminent.

The U.S nonfarm-payrolls rose 203k in November, modestly above the expected 180k increase. Revisions brought the October number down 4k to +200k and September up 12k to +175k. The unemployment rate sank to 7.0% (a new five-year low) from 7.3% as household survey figures remained volatile.

The continued moderately strong jobs reports, now looking more like they're satisfying the Fed's criteria of substantial, sustainable improvement, should be calming nerves at the Fed and pulling forward the schedule for tapering.

The 3-month average growth rate in nonfarm payrolls declined to +193k from +204k. It's still better than the +180k 6-month average and +189k YTD average, but still a little short of where some Fed doves would like to see it. While the 203,000 U.S. jobs print was above consensus in a Reuters poll, it was well within the 125,000 to 230,000 forecast range. (reuters)

Sterling up on strong housing data, shrugs off U.S. payrolls

GBP/USD Daily Chart | Dec 6, 2013

Sterling gained on Friday after a report showed British house prices rose more than expected last month, reinforcing optimism about the economy and expectations that monetary policy tightening will be brought forward.

House prices rose at their fastest pace in more than six years in November but could slow as weak wage growth pressures personal finances, mortgage lender Halifax said on Friday.

Average house prices in the three months to November were 7.7 percent higher than a year earlier. (reuters)

EUR/GBP 4 Hour Chart | Dec 6, 2013

Euro Hits December Highs as ECB Downplays Policy Pivot

Talking points:

- ECB keeps rates on hold, no LTRO.

- Euro initially slips, but soon rallies to fresh December highs versus Australian, US Dollars

- ECB likely on hold through early-1Q’14.

The European Central Bank left its monetary policy firmly on hold today, offering a change in neither the key benchmark interest rate nor the deposit facility rate. After the surprise 25-bps cut last month to the main refinancing rate, the ECB determined that the policy change was already having a positive impact given incoming price and survey data. (source: yahoo finance)

USD/JPY Weekly Chart | Dec 6, 2013

Dollar rises VS Yen after U.S strong jobs data

The dollar rose against the yen on Friday after stronger-than-expected U.S. jobs data raised chances the Federal Reserve may start paring its bond buying program sooner than expected.

The central bank has been buying $85 billion in Treasury and mortgage-backed bonds each month to hold long-term borrowing costs down in a bid to spur a stronger economic recovery.

A reduction in these purchases would lift U.S. bond yields, boosting the dollar.

Still, some analysts doubted the report was strong enough to push the Fed to move when policymakers meet on Dec. 17-18. Many said the central bank was still likely to hold off reducing its purchases until January or March to ensure the economy was on solid ground. (reuters)

Forex Trading Video: Trading Less & Making More Using Higher Timeframes

noreply@blogger.com (Ivan Sonavia) — Sun, 01 Dec 2013 00:21:00 +0000

In the video is Nick B from forex4noobs.com, explain about the basic of how using higher timeframes to trade less.

You will find that excessive trading is harmful to your account, health, mental and relationship as well. Trading by using higher timeframes will make it possible for us to enjoy trading instead of sticking our eyeballs to the screen.

Weekly Forex Market Rhythm | November 30, 2013

noreply@blogger.com (Ivan Sonavia) — Sat, 30 Nov 2013 01:48:00 +0000

EUR/USD Forex Market Rhythm

Long remains as consolidation takes hold

EU maintained the tight ranges prevalent in European trading as EZ CPI turned into a non-event.

The pair held to roughly 1.3595-1.3620 ranges.

Corporate bids held the bottom while hedge funds were touted being on top with offers lined up to 1.3650. Aiding to cap was news that EU & IMF inspectors have called off an Athens visit scheduled next week as Greece has failed to meet commitments.

The sellers won out in the end though after numerous attempts to rally the pair failed & a late-session swoon in U.S. equity mkts put a hurt on risk assets. EUR/JPY slid from 139.45 towards 139.15. EUR/USD cracked the overnight low & tested near support 1.3580 before bouncing back above 1.3590 into the end of the day.

The market now awaits the ECB meeting next week to see if any new easing measures are introduced as inflation remains below target.

GU Moved higher on Mixed Economic Data

GBP/USD Forex Market Rhythm

The pound moving in 1.6315/1.6360 range for most of the European session. UK home prices came in as forecast keeping the pound bid early.

The release of, below forecast, UK mortgage approvals & consumer credit moving the pound to lows near 1.6315.

The dollar began to weaken as EZ inflation & employment data came in near forecast. With the US still in holiday mode, & with no US specific data, cable moved higher near the fix to 1.6385 just above the Jan 2 high.

Weaker YEN and the Geopolitics of East Asia

USD/JPY Forex Market Rhythm

Geopolitical concerns were likely to trump any populist economic protestations from the US Congress when it came to the weakening yen.

In return for helping serve as a check on Chinese military expansion, the US would turn a blind eye to seeing what's really at the heart of Abenomics: reflation mainly predicated on currency debasement.

And so with USD/JPY above 100 and talk of even more BOJ easing in the pipeline, there's nary a peep from Washington. A coincidence?

The Japanese appear to be taking the lead in countering Chinese claims on airspace in the East China Sea with military flyovers. In a strange way, this could allow for a further weakening of the yen without fear of political reprisal in DC. (Reuters)

4 Hour MACD Strategy: Study by Heart Transcript

noreply@blogger.com (Ivan Sonavia) — Sat, 23 Nov 2013 04:43:00 +0000

TRANSCRIPT OF AUDIO FILE #4496 OF PHILLIP

Right, I am going to run through the market motion one more time. I see a lot of people still doing counter trades, counter-trend trades against the trend. Like the one we discuss on the daily Wrapup about that Swissy coming back to the 21EMA.

This chart and this MP3, you got to have it in your heart, not in your head, in your heart. If you look at the purple rectangle on the chart, the price break through the 89SMA blue line. Point 1, 2, 3 and 4 are just there to let you know that you can establish your market breathing or channel or whatever you want to call it so that you can know in what or between which boundaries does the market moves.

But the main thing is to remember when the price break through the 89 SMA, up or down, it doesn’t matter, as it will come back to the 21 EMA which it did and then it went up to the red number 3 on the trend line, then it came back to that red circle 21 EMA.

All those red circles are all high probabilities trades. They are all of the 21 EMA because we are in an up-trend; except for 4, 5 and 6. 4 is from the 89 SMA as well as the 365 EMA. It gave a nice morning star there. It was highly oversold on the MACD, below the 45 line, horizontal line and that was a high probability trade. So, the market moves away from the 89 SMA, pull back to the 21 EMA, then it move away, pull back to the 21 EMA, moves away, pull back to the 21 EMA.

The only time you do counter-trades, counter-trend trades is when your Risk/Reward Ratio (R/R Ratio) down to the 21 EMA and your stop loss is 1 to 1. But remember, sometime, it only come back to the 8 EMA. You need to keep that in mind as it is a high risk trade unless, if you see just right of number red 3 on top, you will see a lot of bars finding resistance there. If you do a trade somewhere around there, you will be probably very safe to come down to the 21 EMA. That’s how you do it.

The blue circle on top is a counter-trend trade. If you look at the 2nd blue one, you will see that the price come below the 21 EMA and the rule says that; at the end of a run, if it will push below the 21 EMA, it tend to pull back to it, sometime it goes a bit through it and then it come down to the 89 SMA. It’s exactly what happens there.

If you look at the bottom window on the MACD, the pink circles 1, 2 and 3, look at that noise there. You cannot trade the MACD like that, you gone be killed, there is no way you can do it. You have to stick with the motion of the market, around the 21 EMA, around your support and resistance lines, that’s the way to do your deals and it is very important to know that. You have to stick to that, there is no other way you are going to survive by taking every signals.

I still hear people on skype and talking about MACD being busy forming a round top and then there is still a 2 or 3 hours to go. You cannot do that, I mean, you can do it but it is not the way your focus should be. Your focus should be around the price movement, where it is in relation to the moving averages, where it is in relation to your trend lines, where is the movement in relation to your support and resistance lines. That is the way your focus should be. That is: when the MACD gives the signal, all that homework as been done already.

If I am sitting there in front of a 4 hours candle, if I got time to sit there for 4 straight hours, I am analyzing the market. I go to a monthly chart and draw my trend lines, then I go to the weekly’s one, do some in between minor trend lines or support and resistance lines. Then I go to the daily and then go to the 4 hours. Eventually, up and down according to the motion and the rules: what do I anticipate this price is going to do? Is the current movement within the rules? Is it within the system or not? If it is not, I just close it and I walk away. I don’t even think of trading. I do rather 4 or 5 good trades a month then do 10 of which only 4 was good and come breakeven at the end of the day. So, it is not about taking every signals.

Also, another thing that I want to emphasize is not to jump around between 10 currencies. Because you can get a wrong one at currency number one, then you jump to currency number 3 and get another wrong one and then you jump to currency number 8 and get another wrong one, where if you stick at currency number 1, the next signal would have been a good one and maybe the one after that as well. So, instead of having 3 wrong ones in 3 different currencies, you could have 1 wrong and 2 right in the same currency.

So be very careful no to jump around according to MACD signals. You’ve got to look at each pace, motion in relation to the moving averages and in relation to your support and resistance lines. Then, look at market emotions as I said in that summary.

Number red 5, you will see there is a morning star, if you look at 6, there is also a morning star. If you look at number 4 there is also a morning star. That is how you determine the emotions of the market, there is emotions involved in those candles. They tell me that those things have got high probabilities of moving in the right direction. That’s how I do it.

Get your focus on the rules, write it down, make yourself a little copy of this chart and write on it or next to it and try to see and look where the market is satisfying this type of motion. That is where your high probabilities trades are because, then, the Tsunami is over, it means the playing ground is over, this thing got direction now, there is a certain motion, there is a certain rhythm in it and you are going to flow in that rhythm. When you go counter-trend trade, you know that you go against the rhythm and you got to make it very sure that there is enough pips available to do that in a Risk/Reward Ratio, it could be 1 to1 or better, then you take it on.

You got to get this in your heart otherwise you are not going to make it.

4 Hour MACD Strategy: Price Movement Rules

noreply@blogger.com (Ivan Sonavia) — Sat, 23 Nov 2013 04:37:00 +0000

This was posted by Golfer on the Forex Factory 4 Hour MACD Thread

The post summarize the price movement rules based on 4 Hour MACD Strategy

1. Your focus should be around the price movement in relations to:
1.1 MA, trendlines, support and resistance levels and big numbers.

1.2 Then look for the MACD to confirm signals.

2. Homework on price movement should have been done before looking at the MACD signal

3. Don’t take every MACD signal.

4. Don’t jump around ten pairs.

4.1 Stay with the minimum and keep track of their price movement (as stipulated in Rule 9-11)

5. Look at market emotions – candle formation at critical points on the chart will show emotions in the market

6. Wait for playing ground to be removed so that the market can get rhythm and definite direction

7. Go with the rhythm and trend of the pair.

8. Counter trend trade only when:

8.1 Near major Trend, Resistance and Support lines

8.2 RR is 1:1 or better

8.3 Towards the 21MA as profit target

9. When price break through the 89MA, it tends to move back to 21MA and then it moves on in that direction.

10. When price breaks through the 200SMA, it moves back to it before moving on.

11. When price breaks back through the 21MA it comes back to 21MA and then move on to the 89MA

Trader's Digest: Recognizing Trading Emotions

noreply@blogger.com (Ivan Sonavia) — Sat, 23 Nov 2013 01:09:00 +0000

Controlling your emotion before, during and after each trade is essential. Most of our decision are made based on our emotion. Trading is obviously one of the most emotional draining activity.

It requires us to have total control of ourselves. Which in my opinion, the hardest part of all.

We have 'beast' live within us.

Below is an article clipped from the Traders Log

Steps to Controlling Emotions and Gaining Trading Discipline:

1. Know what you are going to do before you do it.

A Master Chess Player is at least 6 moves ahead of his opponent at every step in the game of Chess. A Master Trader identifies the market participants in that stock at that moment, determines when the next level of market participants will buy, decides a specific price for entry, and has one or more exit strategies planned for that stock trade before he ever places an order. In other words: he knows what he is going to do before he initiates the trade and has all of his various strategies worked out for all the different scenarios that can happen to that trade. He is prepared for all situations and ready to trade.

2. Develop your own unique Trading Style.

Too often traders simply follow the crowd. Instead you should develop your own unique trading style. A trading style is not a strategy. It is a set of parameters or rules that you adhere to strictly, ignoring rare anomalies that occur in your trading from time to time that go against your rules. Your trading style should also ignore gimmicks, fads, and ‘hot new strategies’ that are constantly being promoted to crowd traders. If you establish a set of parameters for your trading, write those rules down, and follow them while ignoring the crowd mentality of most small retail traders, you will begin to establish strong emotional control in your trading decisions. The trick is writing the parameters down and then sticking to those rules. Emotions want traders to ignore rules.

3. Ignore the Money.

Don’t trade for the money. Trade because you can’t imagine doing anything else. Trade because it is the most enjoyable and rewarding profession you can do. You can have a passion for studying charts without letting passion rule your decisions. Highly successful people, in any career, do not do their job because of the money, they do it because they love what they are doing and can’t imagine doing anything else. The money is secondary to doing the job that gives them purpose and self-esteem. Money is not the ultimate motivator, purpose and self-esteem are.

4. Don’t count your profits before the trade is completed.

Most traders worry about their profits and check them every day. They get elated when a stock they are holding moves up a few points and get frantic when a stock they are in moves down. They constantly check their held positions and calculate their gains or losses during the trading day. This is one of the biggest mistakes traders make and it creates an emotional state of mind that lacks control. Checking your profits or losses constantly is obsessive, gambling mode trading. And it is not based on facts.

Most traders assume that if they are in profit in a held stock they have made that money. Conversely, if they are losing money, then they take the stance that this is just a momentary loss and not a real loss. This is how most traders think, but it is the opposite of what they should be thinking.

To gain control over emotions and to gain discipline in your trading you must view your stocks this way: When a stock moves against you, you immediately have a loss, even before you are taken out of that stock. If the stock moves a few points in your favor then you have the potential for profits. But until you exit that stock you do not have profits. Only when you sell that stock do you actually have profits. A loss is immediate, even before you sell. Approaching your held stocks in this manner is critical to maintaining the proper viewpoint when holding stocks.

If you view every stock this way, your emotional control is geared for correct responses and decisions for the condition of your trade. If you say to yourself that a losing trade is going to turn around, you immediately increase your emotional level so that instead of thinking logically, you are hoping and praying for a miracle that the stock will turn around. This will cause you to miss subtle chart patterns that are telling you to dump the stock and move on.

If you are in a profitable trade and you say to yourself “look at all the money I’ve made!” you are in an emotional euphoric state of mind. Euphoria makes traders feel invincible, and you will ignore weakening patterns. The result of this euphoric state of mind is that you will either hold a stock too long, or you will take greater risks in your next few trades that will result in losses due to poor analysis dominated by emotions and a false sense of invincibility.

Solution to euphoria: First recognize it. Traders are never brilliant. It is only an ideal trade during great market conditions for that trade. To quell the euphoria, do not trade after you have made a huge profit. Take a few days to settle down. This is not gambling where you can say to yourself “I’m on a roll!” You are most definitely NOT on a roll. Trading takes logical analysis, not super-heated emotions of feeling brilliant. If you stop trading and let your emotions calm down, you will see huge improvements in your consistency of profitability. This is the reality of trading the stock market.

5. Know your risk tolerance.

Two chronic complaints from traders is that Market Makers are ‘out to get them’ and that stop losses don’t work. Both are fallacies steeped in conditions that create deep emotional trading patterns. First let’s get rid of ‘The Market Makers are out to get the little guys Syndrome’. The truth is the Market Makers primary role is to keep the markets orderly by buying or selling their own inventory of stock IF there are no buyers or sellers for an order. That is something that occurs only in large lot activity or illiquid stocks.

If you are trading under 5000 (five thousand) share lots, then you are trading what is considered a small lot in today’s market where billions of shares trade hands each day. The reality is that small orders under 10,000 share lots are routed to computer processing systems. These computer programs fill small lot orders automatically when received from the brokerage houses. Market Makers never see these small orders. NASDAQ has its SuperMontage automated order processing system and NYSE has Archipelago. The Market Makers don’t even know you exist. If your stop loss gets taken out and then the stock moves up (or down) this is not because a Market Maker saw your stop loss and decided to take you out of your tiny share lot trade, it occurred because too many small traders all used the same percentage stop loss and thereby accidentally created an imbalance of order flow that triggered a series of automatic selling that caused you to be taken out.

The second myth: Stop losses don’t work. The problem is that you are trading way beyond your risk tolerance. Risk tolerance is different for each trader. Most traders don’t even know what their risk tolerance is nor do they consider this when entering a trade.

The common scenario: A trader places a stop loss that is obviously too tight for the stock’s normal price action patterns because he is afraid to lose money. He thinks that if he keeps a very tight stop, then he is only risking a small amount of money. Often these stop losses are based on a specific dollar amount that has nothing to do the with the chart price action.

The trade is too high risk for his risk tolerance but instead of discarding the trade in search of a trade within his risk tolerance, he trades emotionally by convincing himself the trade will make him a lot of money and that if he just keeps a tighter stop then it is okay. The reality is that by keeping a tighter stop than the stock price action pattern indicates is correct, he is actually increasing his risk for that trade as the normal price action will wipe out that stop loss quickly. And that trader’s normal emotional response is that stop losses don’t work.

Rule for stop losses: Do not use common and popular percentage stop losses. Use proper stop losses based on solid support levels for that stock.

Properly placed stop losses do work. They protect you from the occasional trade that goes against you. And they tell you if the risk of the trade is too high–a common condition of an overextended stock ripe for profit taking by large lot traders. Improperly placed stop losses increase your risk and are an indication that you are trading outside of your risk tolerance. You are therefore trading emotionally.

How to control emotions: Determine your risk tolerance and only trade stocks that are within that range. Usually the lower your capital base the lower your risk tolerance will be. As your capital increases, your risk tolerance should also increase as well. Never trade beyond your risk tolerance because you will trade with a heightened state of emotion and your decisions will be based upon greed or fear rather than logic.

5. Know your Financial Self-Worth.

Financial Self-Worth is probably the least known and least understood aspect of trading emotionally. Most traders don’t even realize or accept how much it impacts their trading. The most common symptom of this problem is the trader who suddenly makes some good trades and profits and is feeling great about his trading but the next few trades are disasters that leave him feeling bewildered and frustrated. If this has happened to you on more than one occasion, one of the reasons may be due to the influence of your financial self-worth.

Your financial self-worth is a culmination of many years of your professional adult work experience, your childhood experiences, your general feelings about money, and your educational experiences which create your perception of your worth to the society you live in. These perceptions are a major emotional constraint in your trading. It is not created by your trading, but has been with you for many years prior to even thinking about becoming a trader. It influences your life far more than you probably realize. It can keep you from earning more money. And it can thwart and hinder your trading profitability. It keeps you from making a higher income and it sabotages your trading whenever you exceed your financial self-worth. It is the primary reason some traders make a lot of money while others have mediocre results.

Fortunately, financial self-worth is easy to determine and easy to adjust upward. Taking the Financial Self-Worth Test will give you a basis that tells you critical information about yourself. Once you have assessed this aspect of your trading, it will lower emotions and give you more control. You can increase your financial self-worth and in doing so will increase your profitability, while eliminating that seesaw effect of gains followed by losses. You will have the tools to stop sabotaging your own trading profits.

7. Treat it like a Business.

If you want to make trading a full time career, you must treat it as any professional would in any career. View trading as a business rather than just a hobby and your entire emotional level will change. Set up an office that is quiet, well organized, and far away from distractions. Keeping your trading computer in the family room is just asking for poor trading results. Maintain accurate records of every transaction you make. Document all of your trading efforts in a Trading Journal. All professionals keep journals or logs to track their performance over time. All serious traders should also have journals or logs that detail what they have done. That way you can easily go back and study what happened before and compare to current patterns.

Professionals never stop learning. They know that being a professional requires constant training and education to continue to hone skills and expertise and to keep up with the ever changing world we live in. Nothing is stagnant, life is constantly changing and so is the stock market.

Be a Specialist. The highest paid and most successful professionals in any field are Specialists. For example, doctors who specialize make far more money than a general practitioner. Traders who specialize also make far greater returns than those who dabble and experiment with every new gimmick and strategy. Choose an area of stock trading and become exceptional in that area.

8. Paper Trade on an ongoing basis.

Test Theories before implementing them. Too often traders learn a new strategy or think of a new theory about trading and then rush in to the market without testing that theory or strategy. The end result is loss, often huge losses. A doctor wouldn’t test a theory on a live patient. Theories are tested in the lab for many years before they are used successfully on patients. The ideal way to test your theories or ideas is to simulate trade the current market for a period of time. Many traders attempt to back-test theories but the problem is that the market is constantly changing. The market we have had in the past 4 years is quite different than the market of the late 1990’s so back-testing your theory on the market of the 1990’s will give you different results than what you will have for this current market.

Reminder: It takes at least 100 trades to fully test a theory. Many traders test a theory on a few trades and then go live in the market only to have disappointing results.

9. Get rid of Traderitis.

Most retail traders trade too often.

They react to the market instead of anticipating the market. Brokers, clearing houses, the news media, stock and options seminars, the exchanges, etc all benefit from retail traders activity.

The more trades you do, the more profits your broker, clearing house, news media, and others make. They want you to trade as often as possible and they don’t care if you make money or lose money so long as you trade, trade, trade.

Traderitis is compulsive trading. It is grounded in the false belief that trading more often will result in more profits. It is a falsehood promoted by those who make money from your trading.

Too many traders have Traderitis and are obsessed with trading and those who benefit from this kind of trader continually feed and nourish the fallacy that you must trade every day. You don’t.

In fact if you only trade a few ideal patterns with low risk and strong profit potential you will be way ahead of your peers who trade hundreds of times every month. This is a proven statistical fact that nobody wants you to know.

10. Be Self-Reliant and take responsibility for your trades.

When a trader lacks self-confidence, they run around trying to find someone else to make their decisions for them.

To be highly successful at anything, you must take responsibility for your own actions. You must learn to depend upon yourself and your ability to make sound decisions. IF you are a novice trader, just starting to trade with limited experience, choose one mentor to guide you while you develop your self-confidence and skills for trading. Don’t listen to every guru and TV commentator as this will only confuse you. Find someone who can help you develop your own unique trading style and wants to teach you to becoming self-reliant.

If you are experienced but have gotten into the bad habit of getting angry after a bad trade, and blame the market, your broker, your trading buddy, your spouse, or whatever for that bad trade, then you need to work on taking charge of your trading.

This is the symptom of someone who lacks self-confidence in their own trading decisions. If you are not confident you can choose good stocks, then you should not be trading live in the market. This usually means you didn’t paper trade or simulate trade long enough when you were first learning to trade.

Solution: Go back to the simulator and stop trading live in the market. It doesn’t matter whether it takes a few weeks or a few years. Until you are confident that you and you alone, are fully capable of consistently choosing good trades, you will never be successful as a stock trader or options player. If you aren’t successful paper trading or simulator trading then you will not be successful trading live in the market.

Professional traders make their own choices and their own decisions. They select one or two websites they use for stock and fundamental analysis, they have one primary charting program, and one to two internet brokers they use. They are comfortable and confident with every trade they enter and they remain calm and secure with their decisions even when the occasional trade goes against them. One bad trade doesn’t ruin their self-confidence. And they always use stop losses to minimize the risk of a large loss. They know that nothing is 100% in or out of the market and that being prepared for all contingencies is the best way to maintain consistent success. They rely upon their own technical skills to select stocks and ignore the crowds that are chasing stocks from “recommended” lists.

In Summary:

Most small retail traders are not held in high opinion by the professional traders of the market. The reason is simple. Most retail traders lack emotional control and discipline. They ignore sound trading rules and rush into the market to get rich, thinking it is easy if they only find that perfect strategy. But those few retail traders who do succeed and become successful are held in high regard by the community of traders. If you want to join this group, follow these simple rules:

Practice, experience, and skill will create self-confidence.

You can’t over-practice trading. Behave professionally and treat your trading as a business. Develop your own unique trading style and don’t follow the crowd. Be self-reliant and develop self-confidence before trading live in the market. Know your financial self-worth and risk tolerance and strive to continually improve both of these areas. Realize that trading is a process and that you will always be in a professional learning mode. Have a passion for what you do but don’t allow passion to rule your trading decisions.

If you do all of these things, you will trade with controlled emotions and will have consistent success as a stock or options trader.

Weekly Forex Market Rhythm: November 15, 2013

noreply@blogger.com (Ivan Sonavia) — Sun, 17 Nov 2013 00:23:00 +0000

Weekly Market Change | Nov 8 - 15, 2013

GBPUSD - Sterling Boosted, Growth Prospects

LONDON, Nov 15 (Reuters) - Sterling extended gains against the euro and the dollar for a third straight day on Friday, drawing support from hawkish comments by Bank of England policymaker Martin Weale.

Weale said in a speech the central bank could not ignore an increase in inflation expectations and may need to tighten monetary policy before all the spare capacity in the economy is used up.

"The positive tone from the inflation report as well as the upgraded forecasts are helping sterling," said Alex Edwards, head of corporate sales at UKForex. "We could see some profit taking into the weekend as volumes dwindle, but overall the trend looks higher."

Traders expect sterling's gains to be more pronounced against the euro, given growing expectations that the European Central Bank may have to loosen policy further to beat falling inflation.

GBPUSD Daily Market Rhythm | November 15, 2013

Safe Havens Weaken After Yellen Testimony

NEW YORK, Nov 15 (Reuters) - The safe-haven dollar and yen fell on Friday after Federal Reserve Vice Chair Janet Yellen lifted investor appetite for riskier assets by defending the U.S. central bank's current stimulus measures.

Yellen, speaking at her confirmation hearing before the Senate Banking committee on Thursday to take over from Fed Chairman Ben Bernanke, said the Fed will keep its stimulus program intact until the U.S. economy shows more strength and stability

"The moderate pace of growth in the U.S. economy no doubt exacerbated by the budget impasse and lack of progress in the job market may explain why the Fed will continue with the monthly purchases," said Sean Cotton, vice president and senior trader at Bank of the West in San Ramon, California.

"As a result, the dollar is extending its decline and expectation is for weakness until the Fed indicates otherwise. This may be the trend until March."

EURUSD Daily Market Rhythm | November 15, 2013

Despite Friday's gains, analysts said the euro's overall prospects looked less upbeat than the dollar's given the disparity between the U.S. and European economies. Weak euro zone GDP numbers on Thursday have kept alive the possibility of more central bank action to stimulate growth.

Forex Market Rhythm: GBPUSD broke below 1.6

noreply@blogger.com (Ivan Sonavia) — Mon, 11 Nov 2013 15:29:00 +0000

GBPUSD broke below 1.6 - November 11, 2013

Sterling dipped against the euro on Monday, pulling away from a 10-month high, as investors kept to the sidelines before this week's Bank of England quarterly inflation report and jobs data.

Consequently this bodes well for sterling, and while gains against the dollar are likely to be limited, euro/sterling is set for a further downward correction, with a break (though) 83.00 on the cards shortly.

But the pound could get a boost on Wednesday if the BoE raises its growth and unemployment forecasts and brings forward the market expectations for when interest rates will rise. Strong UK jobs data on Wednesday would also lift the pound. -Reuters

Forex Market Rhythm: GBPUSD - How strong is 1.6?

noreply@blogger.com (Ivan Sonavia) — Sat, 09 Nov 2013 17:59:00 +0000

Daily GBPUSD chart

Sterling falls on strong U.S. jobs data, weak UK trade

Main points for weekend (Nov 7)

UK trade deficit unexpectedly at widest since Oct 2012
Strong US jobs data pushes sterling/dollar lower
Weak UK trade data also weighs on pound

The pound GBP=D4 fell 0.8 percent to $1.5964, taking it closer to Monday's three-week low of $1.5904.

"Sterling/dollar is under some downward pressure after the employment report from the U.S. revealed a healthier picture for jobs growth than had been anticipated," said Lee Hardman, currency economist at BTMU.

He said it was unlikely the Fed would begin to ease up on stimulus in December but that a January move was "very much in play. The pound could fall towards $1.57 by year-end, he said. (Reuters)

GBPUSD Market Rhythm

On the daily timeframe, GBPUSD are trying to re-test the red trend line I plotted. It was successfully failed to break above the resistance of 1.6120. Below, the 1.6 round number provided strong support which is repeatedly penetrated.

1.61 provide heavy resistance, while there is also significant downward pressure after the NFP shows better than expected figures sparked fear about the fed tapper.

US Economy Bucks Government Shutdown as October NFPs Crush Forecasts

noreply@blogger.com (Ivan Sonavia) — Fri, 08 Nov 2013 19:38:00 +0000

Talking Points:

- October NFPs surge by expectations, reigniting taper talk as US Treasury yields surge.

- Unemployment Rate increases one-tenth of one percent to 7.3% as expected.

- USDJPY surges back to ¥98.92, erasing most of yesterday’s steep losses.

The September US labor market report was delayed by two weeks as a result of the US government shutdown, although market participants hoping to have seen progress have been left disappointed. The US economy’s labor momentum slowed further in September, with jobs growth dropping by -23.3% from August.

Accordingly, with the Federal Reserve’s dual mandate and forward guidance currently focused on bringing the Unemployment Rate down to 6.5% before QE3 is fully tapered, the potential silver lining for the report was a one-tenth of one percent drop in the jobless rate, exceeding the forecast for it to have held at 7.3%. As a result, the market reaction has been not purely USD-negative, but rather risk-positive.

Here’s the data lifting the US Dollar and hurting risk appetite:

- Change in Nonfarm Payrolls (OCT): +204K versus +120K expected, from +163K (revised higher from +148K).

- Change in Private Payrolls (OCT): +212K versus +125K expected, from +150K (revised higher from +126K).

- Unemployment Rate (OCT): 7.3% as expected, from 7.2%.

- Participation Rate (OCT): 62.8% from 63.2% [lowest since 1978].

Overall, the data paints a meager picture of the US labor market in September, which all but certainly deteriorated in October thanks to the US government shutdown. Accordingly, with the Federal Reserve having labeled US fiscal issues as a prime reason not to taper QE3 in September, we find that another hold at $85B/month next week is increasingly likely in the wake of today’s NFP report. Price action in FX markets after the NFP report suggests a similar outcome.

source: DailyFX

Forex Market Rhythm: EUR, GBP and USD Index

noreply@blogger.com (Ivan Sonavia) — Tue, 05 Nov 2013 01:36:00 +0000

USD Index 4 hour timeframe

As the market progress after the expectation of the Fed tappering, the USD start to loose its steam against other major currencies.

In the chart above, the USD Index (4 hour TF) was facing a resistance at around EMA 365 (80.75)
after trying to break through, leaving a shooting star with the tail slightly above EMA 365.

There is a good chance that it will head to EMA 21 (80.35). If true, will provide breathing room for other currencies to advance.

EURUSD 4 hour timeframe

EURUSD 4 hour chart shows a hammer formed also near the EMA 365 (1.3475) after two-days fall from 1.37.

Targeting the EMA 21 (1.3560) before going up to SMA 200 (1.36) which also stands as the Big Round Number previously failed to support the EURUSD from falling further. A tough resistance ahead.

The rebound in the euro came as a survey showed euro zone manufacturing activity accelerated in October as new orders increased for the fourth month in a row.

Still, a sharp slowdown in inflation last week has raised the risk the European Central Bank may be forced to cut interest rates as early as this Thursday's policy meeting, or at least lay the groundwork for a move. (reuters)

GBPUSD 4 hour timeframe

Sterling rose against the dollar and traded near a 2-1/2 week high versus the euro on Monday on strong UK construction activity data and expectations the European Central Bank might loosen policy.

However, Sterling's gains against the dollar were likely to be limited after last week's U.S. Federal Reserve statement which markets viewed as leaving the door open to a scaling back of stimulus as soon as December.

Reflected in the chart, GBPUSD has fallen from 1.60 (1.6260 October high) and supported by 1.59.
The price now move toward EMA 21 (1.5990) and may progress further to SMA 200 (1.6075)

Until then,
trade on your own decision.

Becoming the Black Belt Forex Trader

noreply@blogger.com (Ivan Sonavia) — Tue, 05 Nov 2013 00:17:00 +0000

Forex Basics

Forex trading has become very popular of late. There are plenty of disgruntled stock traders who have had enough of the ups and downs of the stock markets and who are looking to invest their money elsewhere.

You see Forex advertised everywhere. Just open any page on your computer and Forex is in your face. Promises of making tons of money with the click of a tab entice even the most conservative investor to open an account and start trading. And indeed, trading Forex does sound easy.

However, it isn’t.

So don’t fall for all that hype about making Forex your new career or turning your $1000 into $100,000. It just isn’t going to happen.

So let’s be honest. There are certainly people out there that are making money in Fx markets. These are not investors who have just gotten off the boat and have a bit of cash to burn. Those that make money in Forex are the ones who invest time and effort in knowing what Forex is all about and who then move forward.

Start with the basics

Like all things in life, you have to start with the basics. Learning about Forex markets, how currencies are traded and what affects their price movement is the first step in trading Forex. And there really is quite a lot to learn.

There are many online tutorials offered by brokers that teach the basics of Forex trading. There are also more extensive Forex courses provided free of charge by independent firms such FX Academy. Without a clear understanding of Forex, you have no chance of coming out successful.

When you feel you have mastered the basics, the next step is open a demo account with a recommended broker. Choosing a broker that meets your goals and personality may take some time. There are hundreds of online brokers that claim to be the best of the bunch. Speak with a few experienced Forex traders and do your own research. Compare the features of several brokers and see which one offers you what you need.

There are online Forex broker review sites which do the comparison for you and these are worth reading.

Once you have settled on a broker, I recommend you open a demo account for several months. Demo accounts provide you virtual money to use for trading. You trade live but without the risk of losing your money. These accounts give you the time you need to experience Forex trading upfront without the stress associated with real trading.

Another option offered by some brokers is the mini account where smaller amounts of deposit are required. Instead of depositing $1000 or $5000, with a mini account you can start trading with as little as $500. Although the risk of losing too much money has been eliminated, I believe the experience gained by trading in a demo account is much more valuable than moving straight into a real account, albeit a mini one.

While trading in your demo account, you should be developing your own personal trading system. Make it as simple as you can and then test it out and see if it works. If not, move on to another one.

Keep in mind that you will probably lose much more than you will win. About 80% of beginner traders lose all their money during the first few weeks of trading.

"Black belt is white that don't give up"

With some experience under your belt, you can move onto more advanced Forex tools which will help you be more successful. So be patient and don’t get emotionally involved. Forex trading can be profitable but it isn’t as easy as it looks.

GBPUSD Breaking Down 1.6 - November 1 2013

noreply@blogger.com (Ivan Sonavia) — Fri, 01 Nov 2013 14:00:00 +0000

Wrap Up of Fed Surprise - Hail Ben Bernanke

noreply@blogger.com (Ivan Sonavia) — Sat, 21 Sep 2013 14:34:00 +0000

Fed to keep buying $85 billion in bonds per month
Stocks and Bonds rally, U.S Dollar slumps
This won't last forever, of course!

The Fed defied investor expectations on Wednesday by postponing the start of the wind down of its massive monetary stimulus, saying it wanted to wait for more evidence of solid economic growth (i.e Labor Market).

Investor responded by propelling U.S stocks to record highs and driving down bond yields.

Yields on U.S Treasury debt had risen over the summer on expectations the Fed would cut back its $85 billion/month in bond purchase that have been the cornerstone of its efforts to spur the economy (source: Reuters)

The famous safe havens also slumped to 2 months low, giving the chance for riskier assets to rise and shine.

Click for bigger picture

4 HOUR MACD Forex Chart: July 23

noreply@blogger.com (Ivan Sonavia) — Tue, 23 Jul 2013 15:28:00 +0000

July 23, 2013 EURUSD Market Rhythm

Right! (As Philip Nel used to say when he started his trading lesson..)

This is the market rhythm analysis for July 23, 2013 for EURUSD market. The price is now running on the median line with a possibility of breaking higher to reach upper median line (1.33)

Trading Setup:

Bounce off lower median line
Strong Bull market rhythm, as the price is way above EMA 8 and SMA 89.
MACD shows a Trend Continuation signal - a good day to buy?

Risk vs Reward

With the price running to close to the median line, I think it is a good idea to wait to see if it can sustain its pace to break above 1.3250 with take profit around 1.3350 and cut the loss if the price break below 1.3160.

USDJPY Market Rhythm

USDJPY can't maintain above the SMA 89. It is now start to move in bearish market rhythm and while the MACD show a round bottom (buying) signal, it is already near the zero line, which is better for us to wait whether it will break above the zero line, or bounce off and form the down trend continuation pattern.

USDJPY Market Rhythm and Andrew's Pitchfork

noreply@blogger.com (Ivan Sonavia) — Sat, 20 Jul 2013 18:19:00 +0000

USDJPY break above the trendline a.k.a Andrew's Pitchfork

Right!

The gotobi demand and strong USD global sentiment has taken USDJPY as high as 100.86 lately. Slowing down a bit, after market participants squaring their position before the Japan election.

The new USDJPY Andrew's Pitchfork on 4H Timeframe

With the USDJPY already broken the upper median line, now it is time to create a new andrew's pitchfork accordingly.

You can see, that the USD supported by the SMA 89 (at around 100.00, which is a round figure as well) we can be pretty sure that there is still plenty of room for USDJPY bullish sentiment.

Golden Opportunity for Gold Traders

noreply@blogger.com (Ivan Sonavia) — Wed, 17 Jul 2013 13:30:00 +0000

Right!

This is the analysis using Market Rhythm method of analyzing the gold price.

I set it using the weekly time frame (1 candle = 1 week period). You can see it clearly that the price supported by the SMA 360 and start to move upward started 2 weeks ago.

Right now, there are 2 major resistance at around 1310 (EMA 8) and 1400 (EMA 21) respectively. Can it recover from the bottom of the market?

We will see!

Indonesian Property Market Trend 2013

noreply@blogger.com (Ivan Sonavia) — Mon, 20 May 2013 15:41:00 +0000

Beautiful Jakarta, from the Gelora Bung Karno.

Indonesia as one of the emerging market country, would be the target of global investors. Sectors of particular concern today is our domestic property market. Moreover, economies of the developing countries are experiencing a massive slowdown and financial crisis in Europe is not abating. It is confusing where to put our money to.

Countries with stagnant economy will look for other country such as Brazil, Rusia, India, China, South Africa and Indonesia which still have huge potential to grow because we have the natural resources needed to keep the global economy going.

In Indonesia, the survey also shows a growing middle class in the big cities of Indonesia is quite significant. The middle class's economic growth is directly affected the rising demand for houses and other property.

"72 percent of respondent (Indonesian surveyed) are willing to buy property 6 to 12 month ahead, 64% of them are more willing to buy houses instead of any other property."

It is interesting that in the midst of the current global economic uncertainty, the growth properties in Indonesia can be considered rapid and stable.

As a comparison, please note the following chart. By using google trends, we can see how many people are looking for information about 'jual rumah (selling house)' compared to the chart of EURUSD price movement below.

With the EURUSD as one of the indicator of investor's risk appetite, we can see it clearly that the Indonesian property market is still on its long term up trend while the EURUSD is going downward. It is just a simple analysis. After all, the market is as simple as that. It is us that made it complicated.