Mid-week Trading Update (June 30, 2010)

By IBTimes Staff Reporter | June 30 2010 2:37 AM

‘… There are very, very successful traders and I work with some of them. They have highly developed skills, superior sources of information, and an unusual drive for mastery and self-improvement. Most of them spend more time working on their trading outside market hours than during trading sessions proper. As a rule, the ones who don’t work on their trading outside trading hours don’t last – just like an athlete who didn’t work out or practice between games.” — Dr. Brett N. Steenbarger

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Hello:

This is an update on some of the movements on the markets and what we’re doing about them, plus our losses and profits. The analyses are based on daily charts – looking at the Big Picture. Our position size is 0.01 lots for each $1000. The risk on each trade is 2% in a situation of an initial stop. We use the Price Behavior rules for strategic decisions and our customized indicators for tactical entries. We open positions without predetermined exit target in mind, riding the trend for as long as the trend continues. The importance of patience in trading will forever be emphasized. Traders can get bored and jump into bad trades when they’re impatient and this can happen frequently when the market is moving sideways.

AUDUSD

Primary trend: Bearish

We closed a loss on this pair and went short later. The bearish scenario is very strong now.

Order: Sell

Entry date: June 29, 2010

Entry price: 0.8494

Initial stop: 0.8720

Trailing stop: Not yet

Status: Open

Profit/Loss: -22 pips

NZDUSD

Primary trend: Bearish

On a previous trade we got an exit order, and put a Sell Stop pending order. The bias is bearish.

Order: Sell Stop

Entry date: June 30, 2010

Entry price: 0.6902

Initial stop: 0.7102

Trailing stop: Not yet

Status: Pending

Profit/Loss: N/A

EURCAD

Primary trend: Bullish

At last we got an exit order after over 6 months of trend following. We went long on June 24. This could be the beginning of a strong bullish ride.

Order: Buy

Entry date: June 24, 2010

Entry price: 1.2824

Initial stop: 1.2613

Trailing stop: Not yet

Status: Open

Profit/Loss: 51 pips

EURAUD

Primary trend: Bullish

We went short on this pair earlier today. Buyers are reigning for now.

Order: Buy

Entry date: June 30, 2010

Entry price: 1.4355

Initial stop: 1.4154

Trailing stop: Not yet

Status: Open

Profit/Loss: 4 pips

EURNZD

Primary trend: Bullish

There was a previous profitable trade on this cross. We’re still waiting for a bullish signa. If the bullish movement continues today, then we’ll go long tomorrow.

Order: Sell

Entry date: June 9, 2010

Entry price: 1.7957

Initial stop: 1.8157

Trailing stop: 200-pip trailing stop applied

Status: Closed

Exit date: June 15, 2010

Exit price: 1.7709

Profit/Loss: 240 pips

AUDJPY

Primary trend: Bearish

Our last bullish signal on this cross was a flop. The present position is a ‘sell’ signal.

Order: Sell

Entry date: June 25, 2010

Entry price: 77.22

Initial stop: 79.22

Trailing stop: 100-pip trailing stop applied

Status: Open

Profit/Loss: 190 pips

An Observer’s Trading Results: One of my readers opened a demo account at FXOpen and started placing trades based on my signals (he named the demo after my strategy). He places trades according to my most recent signals. The differences are that he’s using 2% initial stops with his trades and uses no trailing stops; he rides the trends until there’s a significant change. I personally use trailing stops especially after some 200-pip profits. So far he has profits and losses of -68 pips on AUDUSD, -15 pips on NZDUSD, 48 pips on EURCAD and 919 pips on AUDJPY.

Conclusion: As for the controversial issue of stop loss, there are advantages and disadvantages to keeping stops tight and getting stopped out frequently. Likewise there are advantages and disadvantages to making stops very wide and getting stopped out less frequently. The most useful approach is to exit only when it’s clear that the market isn’t going in your direction. Getting stopped out when your trading system still indicates that your position is valid isn’t the best trading result; neither does it make sense to stick to a trade after your system is giving you a signal in the opposite direction. I’ll conclude with the quote below:

“It’s all about sticking to a rigid framework and not abandoning the framework when we get emotional, or letting our fears or hopes interfere.’’ — Mike Baghdady (a 35-year veteran of the financial markets)

Your questions and opinions are highly welcome.

Thank you.

With best regards,

Azeez Mustapha

Forex Signals Strategist, Funds Manager &Coach

Email: amustapha@fxinstructor.com

NB: There is risk of loss in trading, but it is possible to be a successful trader.

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