“(Financial markets)… are not a problem to be solved, but psychology to be understood.” — D.R. Barton, Jr.

Hello:

Last week came and went. Whatever the positions we take on the markets, the markets will do what they’ll do. So we simply need to stick to our plans.

Here are my recent trading results:

AUDUSD

Order: Sell

Entry date: August 6, 2010

Entry price: 0.9213

Initial stop: 0.9413

Current stop: 0.9026

Exit price: 0.8910

Exit date: August 20, 2010

Status: Closed

Profit/Loss: 303 pips

EURAUD

Order: Buy

Entry date: August 11, 2010

Entry price: 1.4345

Initial stop: 1.4134

Current stop: N/A

Exit price: 1.4250

Exit date: August 20, 2010

Status: Closed

Profit/Loss: -95 pips

GBPJPY Strategy:

1. Order: Sell

Entry date: August 16, 2010

Entry price: 133.52

Take profit: 132.23

Exit price: 132.23

Exit date: August 20, 2010

Status: Closed

Profit/Loss: 130 pips

2. Order: Buy

Entry date: August 16, 2010

Entry price: 133.55

Take profit: 134.85

Exit price: 132.99

Exit date: August 20, 2010

Status: Closed

Profit/Loss: -56 pips

In general currency markets tend to trend long-term very nicely. The best trading method is still trend following. One task is to try and identify the market turning point for a new trend. Once we’re able to pinpoint the next market move, the next challenge is to ride it for as long as we’re not stopped out. There are so many distractions interfering with our trading but by riding our winners for as long as possible, we’ll be able to stay in winning positions until they reach full maturity, and we’ll also have the courage to exit from losing trades early. We just have to do the normal things while trading. If we wish to trade the markets with constant success, we must abandon contrary or counter trend methods and begin to follow the natural law of following the trends.

What does this tell us? We’ll simply buy low and sell high; but we must endeavor to do it right. This reality about trending markets tells us that it’s more profitable to look for cycle highs in a bear market to sell short, or cycle lows in a bull trend to buy. “The trend is truly your friend.’’

It takes a great deal of time for a trend to change. A trend continues until it’s definitely over. How then can we know if a trend has totally changed? Which signal, which price pattern is definite enough to allow the end of a trend to be announced? The most direct answer which can be given to this question is: When the market prices penetrate the large-scale extreme point – in other words, the last low in an uptrend or the last high in a downtrend.

You might want to ponder these favorite quotes of Dr Van K. Tharp:

1. “Trading and investing are very simple processes and we human beings try to make it into something much more complex. Unfortunately, we have a lot of biases that enter into trading decisions.

2. “I believe people get exactly what they want out of the markets and most people are afraid of success or failure. As a result, they tend to resist change and continue to follow their natural biases and lose in the markets. When you get rid of the fear, you tend to get rid of the biases.

3. “As for risk, most people don’t understand it, including a lot of professionals, and what’s really interesting is that once you understand risk and portfolio management, you can design a trading system with almost any level of performance.”

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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