“…When it comes to making good trading decisions, I actually find all the necessary information on the chart.” – Thomas Kahdemann


This is an update on some of the movements on the markets and what I’m doing about them, plus my losses and profits. The analyses are based on 4-hour charts, looking at the trend. My preferred leverage is 1:100 and my position size is 0.01 lots for each $2000. The risk per trade stands at 0.5%. The Stops are my life insurance policy. I use the Price Behavior rules for strategic decisions and customized indicators for tactical entries. I believe that a ‘buy’ signal that fails is a ‘sell’ signal; and a ‘sell’ signal that fails is a ‘buy’ signal. I open primary positions with a risk-to-reward of 1:3, riding the trend until the target is hit or I’m stopped out. The value of patience will forever be emphasized. As long as I stick to my rules and keep my risk low, I’m immune to fear.

Traders must accept the unpredictability of the future and see this phenomenon as an advantage, trading safely anytime a strategic signal is generated. Concomitantly, our safety measures must be sound and conservative in parameters. This is the only way to ensure long-term survival in the unpredictable financial markets. Yes, unpredictability is our permanent associate. The bright side is that it’s only unpredictability that makes it possible for us to realize all the returns from trading.

Below is the summary of some of my trading activities this week.


Primary Trend: Bullish

The price level at 1.1000 proved to be a great resistance, though in the context of an uptrend. I sold short and made a profit. There’s been a serious violation to the bullish trend, but only an extended bearish movement would render the primary trend invalid.

Order: Sell

Entry date: July 29, 2011

Entry price: 1.0990

Stop loss: 1.1092

Trailing stop: 1.0840

Take profit: 1.0692

Exit date: August 3, 2011

Exit price: 1.0692

Status: Closed

Profit/loss: 298 pips


Primary trend: Bullish

The level at 0.8840 has been a great resistance. The price has been falling in the context of an uptrend, just as the AUDUSD has done. The continuation of the present scenario would render the bullish trend invalid (unless the price resumes its northbound journey). As it’s inevitable, the trend would soon come to an end.


Primary trend: Bearish

This cross has been largely bullish this week, but again, it’s the continuation of the bulls’ domination that could render the bearish outlook useless. Personally, I anticipate more weakness in the Euro – for its days of strength are being numbered.


Primary trend: Bearish

There’s been a significant bullish breakout on this market. The Aussie has been clearly weak against the Euro. I’d like to wait to buy a pullback upon the turning of the trend to clear bullish, or I’d find a way to sell high, trading pro-cyclically.


Primary trend: Bearish

From a bottom of 1.6190, the price has arisen by over 550 pips. The price is quoted above the SMA50 but still below SMA 200. The ADX 20 level is slightly above the level 30, indicating a strong trending mode. The +DI has crossed the -DI to the upside. I’ve no new position here, for I’d like to see further developments before I enter.


Primary trend: Bearish

On this instrument, what started this week as a bearish bias began to turn bullish on Wednesday. The trend is still bearish and I’m already in a short trade which was negative before turning positive. I’m not afraid whether the price moves against me or not, seeing that the market is a mere mass of individual players flowing in a certain direction.

Order: Sell

Entry date: August 1, 2011

Entry price: 84.65

Stop loss: 85.68

Trailing stop: 83.42

Take profit: 81.68

Exit date: N/A

Exit price: N/A

Status: Open

Profit/loss: 212 pips

Conclusion: Why do certain traders still look for ‘foolproof’ entry systems despite the available reality to the contrary? Why do so many traders act irrationally and greedily while trading, targeting high returns? Below, the quotes from Thomas Kahdemann answer these questions. The quotes end this article:

1. “When we’re in extraordinary – either positive or negative – situation, our body releases hormones that block rational thinking.”

2. “The… insight, which I fortunately gained long ago with the help of my mentors, is that the… market and in particular trading is a huge shark tank, where there’s only one goal: survival. This in turn implies that it’s all primarily about risk management and only secondarily about the maximization of profit. Those who choose to ignore this will very quickly ‘be eaten.’ ”

3. “So far, nobody has died of lost profit yet. The first loss is always the smallest, and since risk management always comes first, it’s irrelevant whether or not a position later turns. – Italics mine

Your questions and opinions are highly welcome.

Thank you.

With best regards,

Azeez Mustapha

Forex Signals Strategist, Funds Manager &Coach

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