Weekly Trading Update (February 11, 2011)

By @ibtimes on

“When I am stopped out on a trade, I consider it the cost of doing business as a trader.” – Scott Andrews

Hello:

Traders should think about the consequences of their position sizes and exit techniques before they act. Your exit strategy consists of two parts: Where will you get out of the trade if the market does not go in your favor? Where will you take profits if the market does go in your favor? You only act according to trading rules and then determine a safe position sizing method. In either case, you should always determine where your stop is going to be and how you are going to take profits before you get into the trade. Have a solid plan in place (write it down). This will take all of the emotion out of the trade. Then you can relax and trade the “map” that you have created. This will make your exit strategy easy to follow and it will put you on the path to success.

AUDUSD

Primary Trend: Bullish

This pair tried to move up at the beginning of the week, but an effective resistance at 1.0200 rejected further bullish move. The market reversed, hit my adjusted Stop. My long trade closed with some profit.

Order: Buy

Entry date: January 31, 2011

Entry price: 0.9968

Initial stop: 0.9868

Current stop: 1.0059

Exit date: February 10, 2011

Exit price: 1.0059

Status: Closed

Profit/loss: 100 pips

Percentage growth: 1%

NZDUSD

Primary trend: Bullish

No sooner had the primary trend turned bullish than there’s a serious threat to it. The Kiwi eventually yielded its strength versus the Greenback. The initial signal was missed, but there may soon be a good opportunity to sell a short-term rally in the context of a downtrend. Intraday traders are concerned about what’s happening on the market now, rather than what happened on the market in the past.

EURCAD

Primary trend: Bullish

There’s been a constant restriction to a further bullish move beyond 1.3720. It appears that the Canadian dollar is getting very weak; because the Euro is getting stronger against the NZD. The initial weakness on the market has generated a nice ‘sell’ order, which would be entered as soon as possible.

EURAUD

Primary trend: Bullish

The short trade I had on this cross reversed against me and I was able to exit with some gain. It’s a kind of the market is trying to go into an overbought region. However this is not a ‘sell’ signal. The market can be in an overbought or oversold condition for a long time – new

Order: Sell Stop

Entry date: January 28, 2011

Entry price: 1.3700

Initial stop: 1.3800

Current stop: 1.3528

Exit date: February 9, 2011

Exit price: 1.3528

Status: Closed

Profit/loss: 170 pips

Percentage growth: 1.7%

EURNZD

Primary trend: Bullish

The bullish bias on this instrument remains intact. Plus this bias may continue if the NZD has further weakness. The price is above the SMA 20. The ADX 20 level is still showing low volatility. +DI is now clearly above its –DI counterpart. I may buy when the price experiences a pullback. I have no open position on the instrument (this is also true of other pairs and crosses).

Order: Sell

Entry date: February 2, 2011

Entry price: 1.7832

Initial stop: 1.7932

Current stop: 1.7725

Exit date: February 4, 2011

Exit price: 1.7725

Status: Closed

Profit/loss: 100 pips

Percentage growth: 1%

AUDJPY

Primary trend: Bullish

There’s been a steady rise on this cross. Any further significant weakness in the AUD could make the cross go down. Money would be made in any market conditions, and that’s what’s also been put in mind. No matter what happens, I’d remain cool because I know that doing the right thing would ensure my long-term survival. I’ll just need to enjoy myself, knowing that my risk is under control. Would you advise me to drink Champagne?

Conclusion: Do you have a realistic trading goal? What do you want out of trading? Do you have reasonable expectations, or do you fantasize about things that may be beyond your ability and trading realities? Wise traders don’t pursue unrealistic goals. They, therefore, try to be content with whatever profit they have. As long as their trading portfolios are safe, they’re satisfied with any increment they have on it.

I conclude this article with more quotes from Scott Andrews, a highly efficient gap trader:

1. “I knew there were hundreds, if not thousands, of ways to make money in the markets, I just needed to find the right one for me.”

2. “I would say that sticking with my system when it has a drawdown is probably the toughest aspect for me.”

3. “Since there are no bosses to provide feedback on a daily basis, it is easy to link one’s sense of self worth to one’s performance in the markets for a given day or week or month. But do not! It will only make your trading worse. It took me quite a while to dissociate my trading results from my self-esteem and to avoid letting my daily results affect my mood.”

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